Correlation Between Pathfinder Bancorp and Farmers

Can any of the company-specific risk be diversified away by investing in both Pathfinder Bancorp and Farmers at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pathfinder Bancorp and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pathfinder Bancorp and Farmers And Merchants, you can compare the effects of market volatilities on Pathfinder Bancorp and Farmers and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pathfinder Bancorp with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pathfinder Bancorp and Farmers.

Diversification Opportunities for Pathfinder Bancorp and Farmers

0.72

Correlation Coefficient

Pathfinder Bancorp  Farmers

Poor diversification

The 3 months correlation between Pathfinder and Farmers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pathfinder Bancorp and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Pathfinder Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pathfinder Bancorp are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Pathfinder Bancorp i.e., Pathfinder Bancorp and Farmers go up and down completely randomly.

Pair Corralation between Pathfinder Bancorp and Farmers

Given the investment horizon of 90 days Pathfinder Bancorp is expected to generate 1.59 times less return on investment than Farmers. In addition to that, Pathfinder Bancorp is 3.9 times more volatile than Farmers And Merchants. It trades about 0.06 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.35 per unit of volatility. If you would invest  496,092  in Farmers And Merchants on September 4, 2024 and sell it today you would earn a total of  81,808  from holding Farmers And Merchants or generate 16.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Pathfinder Bancorp  vs.  Farmers And Merchants

Pathfinder Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pathfinder Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, Pathfinder Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Farmers And Merchants

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Farmers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pathfinder Bancorp and Farmers

The main advantage of trading using opposite Pathfinder Bancorp and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pathfinder Bancorp position performs unexpectedly, Farmers can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Farmers will offset losses from the drop in Farmers' long position.

The idea behind Pathfinder Bancorp and Farmers And Merchants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.