Correlation Between Eastern Bankshares and Equity Bancshares,

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

By analyzing existing cross correlation between Eastern Bankshares and Equity Bancshares,, you can compare the effects of market volatilities on Eastern Bankshares and Equity Bancshares, 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 Eastern Bankshares with a short position of Equity Bancshares,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Bankshares and Equity Bancshares,.

Diversification Opportunities for Eastern Bankshares and Equity Bancshares,

0.95

Correlation Coefficient

Eastern Bankshares  Equity Bancshares,

Almost no diversification

The 3 months correlation between Eastern and Equity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Bankshares and Equity Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Bancshares, and Eastern Bankshares 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 Eastern Bankshares are associated (or correlated) with Equity Bancshares,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Bancshares, has no effect on the direction of Eastern Bankshares i.e., Eastern Bankshares and Equity Bancshares, go up and down completely randomly.

Pair Corralation between Eastern Bankshares and Equity Bancshares,

Considering the 90-day investment horizon Eastern Bankshares is expected to generate 1.72 times less return on investment than Equity Bancshares,. In addition to that, Eastern Bankshares is 1.11 times more volatile than Equity Bancshares,. It trades about 0.08 of its total potential returns per unit of risk. Equity Bancshares, is currently generating about 0.16 per unit of volatility. If you would invest  3,978  in Equity Bancshares, on September 4, 2024 and sell it today you would earn a total of  893.00  from holding Equity Bancshares, or generate 22.45% return on investment over 90 days.

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

Eastern Bankshares  vs.  Equity Bancshares,

Eastern Bankshares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Bankshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Eastern Bankshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Equity Bancshares,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares, are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Equity Bancshares, disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern Bankshares and Equity Bancshares,

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

The idea behind Eastern Bankshares and Equity Bancshares, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.