Correlation Between Freedom Bank and Eastern

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

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

Diversification Opportunities for Freedom Bank and Eastern

0.26

Correlation Coefficient

Freedom Bank  Eastern

Modest diversification

The 3 months correlation between Freedom and Eastern is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Freedom Bank i.e., Freedom Bank and Eastern go up and down completely randomly.

Pair Corralation between Freedom Bank and Eastern

Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.37 times more return on investment than Eastern. However, Freedom Bank of is 2.7 times less risky than Eastern. It trades about -0.05 of its potential returns per unit of risk. Eastern Co is currently generating about -0.09 per unit of risk. If you would invest  1,060  in Freedom Bank of on October 24, 2024 and sell it today you would lose (30.00) from holding Freedom Bank of or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Freedom Bank of  vs.  Eastern Co

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Freedom Bank and Eastern

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

The idea behind Freedom Bank of and Eastern Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.