Correlation Between Taylor Calvin and Eagle Financial

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

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

Diversification Opportunities for Taylor Calvin and Eagle Financial

-0.56

Correlation Coefficient

Taylor Calvin  Eagle Financial

Excellent diversification

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

Pair Corralation between Taylor Calvin and Eagle Financial

Given the investment horizon of 90 days Taylor Calvin is expected to generate 2.5 times less return on investment than Eagle Financial. In addition to that, Taylor Calvin is 1.38 times more volatile than Eagle Financial Services. It trades about 0.04 of its total potential returns per unit of risk. Eagle Financial Services is currently generating about 0.14 per unit of volatility. If you would invest  3,269  in Eagle Financial Services on September 4, 2024 and sell it today you would earn a total of  281.00  from holding Eagle Financial Services or generate 8.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Taylor Calvin B  vs.  Eagle Financial Services

Taylor Calvin B

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Calvin B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Taylor Calvin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eagle Financial Services

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Financial Services are ranked lower than 10 (%) 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 January 2025.

Pair Trading with Taylor Calvin and Eagle Financial

The main advantage of trading using opposite Taylor Calvin and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Calvin 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 Taylor Calvin B 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.