Correlation Between Eagle Financial and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Eagle Financial and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Eagle Financial and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and Farmers Bancorp.
Diversification Opportunities for Eagle Financial and Farmers Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and Farmers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Eagle Financial i.e., Eagle Financial and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Eagle Financial and Farmers Bancorp
Given the investment horizon of 90 days Eagle Financial Services is expected to generate 1.09 times more return on investment than Farmers Bancorp. However, Eagle Financial is 1.09 times more volatile than Farmers Bancorp. It trades about 0.02 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.02 per unit of risk. If you would invest 3,387 in Eagle Financial Services on November 2, 2024 and sell it today you would earn a total of 238.00 from holding Eagle Financial Services or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.33% |
| Values | Daily Returns |
Eagle Financial Services vs. Farmers Bancorp
Performance |
| Timeline |
| Eagle Financial Services |
| Farmers Bancorp |
Eagle Financial and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Financial and Farmers Bancorp
The main advantage of trading using opposite Eagle Financial and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Financial position performs unexpectedly, Farmers Bancorp 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 Bancorp will offset losses from the drop in Farmers Bancorp'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 |
| Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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