Correlation Between Eagle Financial and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both Eagle Financial and Farmers Merchants 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 Merchants 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 Merchants Bancorp, you can compare the effects of market volatilities on Eagle Financial and Farmers Merchants 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 Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and Farmers Merchants.
Diversification Opportunities for Eagle Financial and Farmers Merchants
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eagle and Farmers is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants 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 Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of Eagle Financial i.e., Eagle Financial and Farmers Merchants go up and down completely randomly.
Pair Corralation between Eagle Financial and Farmers Merchants
Given the investment horizon of 90 days Eagle Financial Services is expected to under-perform the Farmers Merchants. But the otc stock apears to be less risky and, when comparing its historical volatility, Eagle Financial Services is 1.65 times less risky than Farmers Merchants. The otc stock trades about -0.48 of its potential returns per unit of risk. The Farmers Merchants Bancorp is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Farmers Merchants Bancorp on November 28, 2024 and sell it today you would lose (222.00) from holding Farmers Merchants Bancorp or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Eagle Financial Services vs. Farmers Merchants Bancorp
Performance |
| Timeline |
| Eagle Financial Services |
| Farmers Merchants Bancorp |
Eagle Financial and Farmers Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Financial and Farmers Merchants
The main advantage of trading using opposite Eagle Financial and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Financial position performs unexpectedly, Farmers Merchants 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 Merchants will offset losses from the drop in Farmers Merchants' long position.| Eagle Financial vs. Chesapeake Finl Shs | Eagle Financial vs. PSB Holdings | Eagle Financial vs. Farmers Merchants Bancorp | Eagle Financial vs. First Financial |
| Farmers Merchants vs. Home Federal Bancorp | Farmers Merchants vs. First Financial Northwest | Farmers Merchants vs. First Northwest Bancorp | Farmers Merchants vs. First Capital |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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