Correlation Between Farmers and Eagle Financial

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

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

Diversification Opportunities for Farmers and Eagle Financial

0.65

Correlation Coefficient

Farmers  Eagle Financial

Poor diversification

The 3 months correlation between Farmers and Eagle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Farmers And Merchants 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 Farmers 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 Farmers And Merchants 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 Farmers i.e., Farmers and Eagle Financial go up and down completely randomly.

Pair Corralation between Farmers and Eagle Financial

Given the investment horizon of 90 days Farmers is expected to generate 11.44 times less return on investment than Eagle Financial. But when comparing it to its historical volatility, Farmers And Merchants is 2.99 times less risky than Eagle Financial. It trades about 0.03 of its potential returns per unit of risk. Eagle Financial Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,961  in Eagle Financial Services on May 6, 2025 and sell it today you would earn a total of  341.00  from holding Eagle Financial Services or generate 11.52% return on investment over 90 days.

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

Farmers And Merchants  vs.  Eagle Financial Services

Farmers And Merchants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Farmers is not utilizing all of its potentials. The current 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 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Eagle Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Farmers and Eagle Financial

The main advantage of trading using opposite Farmers and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers 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 Farmers And Merchants 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.