Correlation Between Uwharrie Capital and Farmers Bank

Can any of the company-specific risk be diversified away by investing in both Uwharrie Capital and Farmers Bank 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 Uwharrie Capital and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Uwharrie Capital Corp and The Farmers Bank, you can compare the effects of market volatilities on Uwharrie Capital and Farmers Bank 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 Uwharrie Capital with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uwharrie Capital and Farmers Bank.

Diversification Opportunities for Uwharrie Capital and Farmers Bank

0.51

Correlation Coefficient

Uwharrie Capital  Farmers Bank

Very weak diversification

The 3 months correlation between Uwharrie and Farmers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Uwharrie Capital Corp and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and Uwharrie Capital 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 Uwharrie Capital Corp are associated (or correlated) with Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of Uwharrie Capital i.e., Uwharrie Capital and Farmers Bank go up and down completely randomly.

Pair Corralation between Uwharrie Capital and Farmers Bank

Given the investment horizon of 90 days Uwharrie Capital Corp is expected to under-perform the Farmers Bank. In addition to that, Uwharrie Capital is 2.01 times more volatile than The Farmers Bank. It trades about 0.0 of its total potential returns per unit of risk. The Farmers Bank is currently generating about 0.02 per unit of volatility. If you would invest  2,300  in The Farmers Bank on December 29, 2024 and sell it today you would earn a total of  25.00  from holding The Farmers Bank or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Uwharrie Capital Corp  vs.  The Farmers Bank

Uwharrie Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uwharrie Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Uwharrie Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Farmers Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Farmers Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Farmers Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Uwharrie Capital and Farmers Bank

The main advantage of trading using opposite Uwharrie Capital and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uwharrie Capital position performs unexpectedly, Farmers Bank 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 Bank will offset losses from the drop in Farmers Bank's long position.

The idea behind Uwharrie Capital Corp and The Farmers Bank 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.