Correlation Between Eagle Financial and Eagle Bancorp

Can any of the company-specific risk be diversified away by investing in both Eagle Financial and Eagle 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 Eagle 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 Eagle Bancorp Montana, you can compare the effects of market volatilities on Eagle Financial and Eagle 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and Eagle Bancorp.

Diversification Opportunities for Eagle Financial and Eagle Bancorp

-0.87

Correlation Coefficient

Eagle Financial  Eagle Bancorp

Pay attention - limited upside

The 3 months correlation between Eagle and Eagle is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp Montana has no effect on the direction of Eagle Financial i.e., Eagle Financial and Eagle Bancorp go up and down completely randomly.

Pair Corralation between Eagle Financial and Eagle Bancorp

Given the investment horizon of 90 days Eagle Financial Services is expected to under-perform the Eagle Bancorp. But the otc stock apears to be less risky and, when comparing its historical volatility, Eagle Financial Services is 1.83 times less risky than Eagle Bancorp. The otc stock trades about -0.27 of its potential returns per unit of risk. The Eagle Bancorp Montana is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,487  in Eagle Bancorp Montana on January 5, 2025 and sell it today you would earn a total of  119.00  from holding Eagle Bancorp Montana or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	82.26%
Values	Daily Returns

Eagle Financial Services  vs.  Eagle Bancorp Montana

Eagle Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Eagle Bancorp Montana

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Bancorp Montana are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Eagle Bancorp may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Eagle Financial and Eagle Bancorp

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

The idea behind Eagle Financial Services and Eagle Bancorp Montana 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.