Correlation Between Heritage Financial and Eastern Bankshares
Can any of the company-specific risk be diversified away by investing in both Heritage Financial and Eastern Bankshares 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 Heritage Financial and Eastern Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and Eastern Bankshares, you can compare the effects of market volatilities on Heritage Financial and Eastern Bankshares 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 Heritage Financial with a short position of Eastern Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and Eastern Bankshares.
Diversification Opportunities for Heritage Financial and Eastern Bankshares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heritage and Eastern is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and Eastern Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Bankshares and Heritage 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 Heritage Financial are associated (or correlated) with Eastern Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Bankshares has no effect on the direction of Heritage Financial i.e., Heritage Financial and Eastern Bankshares go up and down completely randomly.
Pair Corralation between Heritage Financial and Eastern Bankshares
Given the investment horizon of 90 days Heritage Financial is expected to generate 1.67 times less return on investment than Eastern Bankshares. In addition to that, Heritage Financial is 1.03 times more volatile than Eastern Bankshares. It trades about 0.03 of its total potential returns per unit of risk. Eastern Bankshares is currently generating about 0.06 per unit of volatility. If you would invest 1,726 in Eastern Bankshares on October 21, 2024 and sell it today you would earn a total of 24.00 from holding Eastern Bankshares or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. Eastern Bankshares
Performance |
| Timeline |
| Heritage Financial |
| Eastern Bankshares |
Heritage Financial and Eastern Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and Eastern Bankshares
The main advantage of trading using opposite Heritage Financial and Eastern Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial position performs unexpectedly, Eastern Bankshares 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 Eastern Bankshares will offset losses from the drop in Eastern Bankshares' long position.| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First Bancshares, |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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