Correlation Between Alpine Banks and Eagle Financial

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

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

Diversification Opportunities for Alpine Banks and Eagle Financial

0.61

Correlation Coefficient

Alpine Banks  Eagle Financial

Poor diversification

The 3 months correlation between Alpine and Eagle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of 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 Alpine Banks 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 Alpine Banks of 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 Alpine Banks i.e., Alpine Banks and Eagle Financial go up and down completely randomly.

Pair Corralation between Alpine Banks and Eagle Financial

Assuming the 90 days horizon Alpine Banks of is expected to generate 1.32 times more return on investment than Eagle Financial. However, Alpine Banks is 1.32 times more volatile than Eagle Financial Services. It trades about -0.11 of its potential returns per unit of risk. Eagle Financial Services is currently generating about -0.22 per unit of risk. If you would invest  3,402  in Alpine Banks of on December 26, 2024 and sell it today you would lose (242.00) from holding Alpine Banks of or give up 7.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.33%
Values	Daily Returns

Alpine Banks of  vs.  Eagle Financial Services

Alpine Banks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpine Banks of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Alpine Banks and Eagle Financial

The main advantage of trading using opposite Alpine Banks and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Banks 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 Alpine Banks of 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.