Correlation Between Community Heritage and Eagle Financial

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

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

Diversification Opportunities for Community Heritage and Eagle Financial

-0.56

Correlation Coefficient

Community Heritage  Eagle Financial

Excellent diversification

The 3 months correlation between Community and Eagle is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Community Heritage Financial 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 Community Heritage 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 Community Heritage Financial 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 Community Heritage i.e., Community Heritage and Eagle Financial go up and down completely randomly.

Pair Corralation between Community Heritage and Eagle Financial

Given the investment horizon of 90 days Community Heritage Financial is expected to generate 0.66 times more return on investment than Eagle Financial. However, Community Heritage Financial is 1.52 times less risky than Eagle Financial. It trades about 0.11 of its potential returns per unit of risk. Eagle Financial Services is currently generating about -0.24 per unit of risk. If you would invest  2,392  in Community Heritage Financial on December 28, 2024 and sell it today you would earn a total of  63.00  from holding Community Heritage Financial or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.74%
Values	Daily Returns

Community Heritage Financial  vs.  Eagle Financial Services

Community Heritage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Heritage Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Community Heritage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Community Heritage and Eagle Financial

The main advantage of trading using opposite Community Heritage and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Heritage 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 Community Heritage Financial 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.