Correlation Between Prime Meridian and Fentura Financial
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and Fentura Financial 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 Prime Meridian and Fentura Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and Fentura Financial, you can compare the effects of market volatilities on Prime Meridian and Fentura Financial 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 Prime Meridian with a short position of Fentura Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and Fentura Financial.
Diversification Opportunities for Prime Meridian and Fentura Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prime and Fentura is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and Fentura Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fentura Financial and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with Fentura Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fentura Financial has no effect on the direction of Prime Meridian i.e., Prime Meridian and Fentura Financial go up and down completely randomly.
Pair Corralation between Prime Meridian and Fentura Financial
Given the investment horizon of 90 days Prime Meridian is expected to generate 1.04 times less return on investment than Fentura Financial. But when comparing it to its historical volatility, Prime Meridian Holding is 1.18 times less risky than Fentura Financial. It trades about 0.18 of its potential returns per unit of risk. Fentura Financial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,885 in Fentura Financial on September 16, 2024 and sell it today you would earn a total of 725.00 from holding Fentura Financial or generate 18.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Prime Meridian Holding vs. Fentura Financial
Performance |
Timeline |
Prime Meridian Holding |
Fentura Financial |
Prime Meridian and Fentura Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prime Meridian and Fentura Financial
The main advantage of trading using opposite Prime Meridian and Fentura Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, Fentura Financial 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 Fentura Financial will offset losses from the drop in Fentura Financial's long position.Prime Meridian vs. Freedom Bank of | Prime Meridian vs. HUMANA INC | Prime Meridian vs. Barloworld Ltd ADR | Prime Meridian vs. Morningstar Unconstrained Allocation |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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