Correlation Between Eagle Financial and Finward Bancorp

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

Diversification Opportunities for Eagle Financial and Finward Bancorp

-0.56

Correlation Coefficient

Eagle Financial  Finward Bancorp

Excellent diversification

The 3 months correlation between Eagle and Finward is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward 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 Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Eagle Financial i.e., Eagle Financial and Finward Bancorp go up and down completely randomly.

Pair Corralation between Eagle Financial and Finward Bancorp

Given the investment horizon of 90 days Eagle Financial Services is expected to under-perform the Finward Bancorp. In addition to that, Eagle Financial is 3.13 times more volatile than Finward Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Finward Bancorp is currently generating about 0.34 per unit of volatility. If you would invest  2,879  in Finward Bancorp on February 3, 2025 and sell it today you would earn a total of  202.00  from holding Finward Bancorp or generate 7.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagle Financial Services  vs.  Finward Bancorp

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 latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Finward Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Finward Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Financial and Finward Bancorp

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

The idea behind Eagle Financial Services and Finward Bancorp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.