Correlation Between Eagle Financial and Bank of Idaho Holding
Can any of the company-specific risk be diversified away by investing in both Eagle Financial and Bank of Idaho Holding 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 Eagle Financial and Bank of Idaho Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Financial Services and Bank of Idaho, you can compare the effects of market volatilities on Eagle Financial and Bank of Idaho Holding 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 Eagle Financial with a short position of Bank of Idaho Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and Bank of Idaho Holding.
Diversification Opportunities for Eagle Financial and Bank of Idaho Holding
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eagle and Bank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Bank of Idaho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Idaho Holding and Eagle Financial 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 Eagle Financial Services are associated (or correlated) with Bank of Idaho Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Idaho Holding has no effect on the direction of Eagle Financial i.e., Eagle Financial and Bank of Idaho Holding go up and down completely randomly.
Pair Corralation between Eagle Financial and Bank of Idaho Holding
Given the investment horizon of 90 days Eagle Financial Services is expected to generate 2.53 times more return on investment than Bank of Idaho Holding. However, Eagle Financial is 2.53 times more volatile than Bank of Idaho. It trades about 0.04 of its potential returns per unit of risk. Bank of Idaho is currently generating about 0.08 per unit of risk. If you would invest 2,957 in Eagle Financial Services on August 31, 2024 and sell it today you would earn a total of 593.00 from holding Eagle Financial Services or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.6% |
| Values | Daily Returns |
Eagle Financial Services vs. Bank of Idaho
Performance |
| Timeline |
| Eagle Financial Services |
| Bank of Idaho Holding |
Eagle Financial and Bank of Idaho Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Financial and Bank of Idaho Holding
The main advantage of trading using opposite Eagle Financial and Bank of Idaho Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Financial position performs unexpectedly, Bank of Idaho Holding 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 Bank of Idaho Holding will offset losses from the drop in Bank of Idaho Holding's long position.| Eagle Financial vs. Chesapeake Finl Shs | Eagle Financial vs. Taylor Calvin B | Eagle Financial vs. PSB Holdings | Eagle Financial vs. Farmers Merchants Bancorp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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