Correlation Between Bondbloxx ETF and First Farmers

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

By analyzing existing cross correlation between Bondbloxx ETF Trust and First Farmers Financial, you can compare the effects of market volatilities on Bondbloxx ETF and First 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 Bondbloxx ETF with a short position of First Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and First Farmers.

Diversification Opportunities for Bondbloxx ETF and First Farmers

0.61

Correlation Coefficient

Bondbloxx ETF  First Farmers

Poor diversification

The 3 months correlation between Bondbloxx and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and First Farmers Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Farmers Financial and Bondbloxx ETF 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 Bondbloxx ETF Trust are associated (or correlated) with First Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Farmers Financial has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and First Farmers go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and First Farmers

Given the investment horizon of 90 days Bondbloxx ETF Trust is expected to under-perform the First Farmers. But the etf apears to be less risky and, when comparing its historical volatility, Bondbloxx ETF Trust is 3.66 times less risky than First Farmers. The etf trades about -0.07 of its potential returns per unit of risk. The First Farmers Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,600  in First Farmers Financial on September 15, 2024 and sell it today you would earn a total of  99.00  from holding First Farmers Financial or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  First Farmers Financial

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

First Farmers Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Farmers Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, First Farmers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bondbloxx ETF and First Farmers

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

The idea behind Bondbloxx ETF Trust and First Farmers Financial 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.