Correlation Between CommerceWest Bank and Eagle Financial

Can any of the company-specific risk be diversified away by investing in both CommerceWest Bank and Eagle 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 CommerceWest Bank and Eagle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CommerceWest Bank and Eagle Financial Services, you can compare the effects of market volatilities on CommerceWest Bank and Eagle 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 CommerceWest Bank with a short position of Eagle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CommerceWest Bank and Eagle Financial.

Diversification Opportunities for CommerceWest Bank and Eagle Financial

0.18

Correlation Coefficient

CommerceWest Bank  Eagle Financial

Average diversification

The 3 months correlation between CommerceWest and Eagle is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CommerceWest Bank and Eagle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Financial Services and CommerceWest Bank 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 CommerceWest Bank are associated (or correlated) with Eagle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Financial Services has no effect on the direction of CommerceWest Bank i.e., CommerceWest Bank and Eagle Financial go up and down completely randomly.

Pair Corralation between CommerceWest Bank and Eagle Financial

Given the investment horizon of 90 days CommerceWest Bank is expected to generate 2.18 times less return on investment than Eagle Financial. In addition to that, CommerceWest Bank is 1.06 times more volatile than Eagle Financial Services. It trades about 0.06 of its total potential returns per unit of risk. Eagle Financial Services is currently generating about 0.14 per unit of volatility. If you would invest  2,933  in Eagle Financial Services on May 6, 2025 and sell it today you would earn a total of  369.00  from holding Eagle Financial Services or generate 12.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CommerceWest Bank  vs.  Eagle Financial Services

CommerceWest Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CommerceWest Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, CommerceWest Bank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Eagle Financial Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Financial Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Eagle Financial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CommerceWest Bank and Eagle Financial

The main advantage of trading using opposite CommerceWest Bank and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CommerceWest Bank position performs unexpectedly, Eagle 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 Eagle Financial will offset losses from the drop in Eagle Financial's long position.

The idea behind CommerceWest Bank and Eagle Financial Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.