Correlation Between ESSA Bancorp and Farmers
Can any of the company-specific risk be diversified away by investing in both ESSA 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 ESSA Bancorp and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Farmers and Merchants, you can compare the effects of market volatilities on ESSA 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 ESSA Bancorp with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Farmers.
Diversification Opportunities for ESSA Bancorp and Farmers
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between ESSA and Farmers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ESSA 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 ESSA 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 ESSA 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 ESSA Bancorp i.e., ESSA Bancorp and Farmers go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Farmers
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 0.9 times more return on investment than Farmers. However, ESSA Bancorp is 1.12 times less risky than Farmers. It trades about 0.01 of its potential returns per unit of risk. Farmers and Merchants is currently generating about -0.07 per unit of risk. If you would invest 1,630 in ESSA Bancorp on January 24, 2024 and sell it today you would lose (30.00) from holding ESSA Bancorp or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Farmers and Merchants
Performance |
| Timeline |
| ESSA Bancorp |
| Farmers and Merchants |
ESSA Bancorp and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Farmers
The main advantage of trading using opposite ESSA Bancorp and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA 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.| ESSA Bancorp vs. Cullman Bancorp | ESSA Bancorp vs. Home Federal Bancorp | ESSA Bancorp vs. First Financial Northwest | ESSA Bancorp vs. First Northwest Bancorp |
| Farmers vs. First Horizon | Farmers vs. First Horizon | Farmers vs. KB Financial Group | Farmers vs. Banco Santander Brasil |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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