Correlation Between Eagle Financial and First Financial
Can any of the company-specific risk be diversified away by investing in both Eagle Financial and First Financial 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 First Financial 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 First Financial, you can compare the effects of market volatilities on Eagle Financial and First Financial 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and First Financial.
Diversification Opportunities for Eagle Financial and First Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and First is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and First Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial has no effect on the direction of Eagle Financial i.e., Eagle Financial and First Financial go up and down completely randomly.
Pair Corralation between Eagle Financial and First Financial
Given the investment horizon of 90 days Eagle Financial is expected to generate 1.5 times less return on investment than First Financial. But when comparing it to its historical volatility, Eagle Financial Services is 2.72 times less risky than First Financial. It trades about 0.37 of its potential returns per unit of risk. First Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,296 in First Financial on September 1, 2024 and sell it today you would earn a total of 615.00 from holding First Financial or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Eagle Financial Services vs. First Financial
Performance |
| Timeline |
| Eagle Financial Services |
| First Financial |
Eagle Financial and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Financial and First Financial
The main advantage of trading using opposite Eagle Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Financial position performs unexpectedly, First Financial 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 Financial will offset losses from the drop in First Financial'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 |
| First Financial vs. Chemung Financial Corp | First Financial vs. Citizens Northern Corp | First Financial vs. National Bankshares | First Financial vs. Fidelity DD 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |