Correlation Between Brookline Bancorp and Eagle Financial

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Can any of the company-specific risk be diversified away by investing in both Brookline Bancorp 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 Brookline Bancorp and Eagle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookline Bancorp and Eagle Financial Services, you can compare the effects of market volatilities on Brookline Bancorp 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 Brookline Bancorp with a short position of Eagle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookline Bancorp and Eagle Financial.

Diversification Opportunities for Brookline Bancorp and Eagle Financial

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Brookline and Eagle is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Brookline Bancorp 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 Brookline Bancorp 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 Brookline Bancorp 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 Brookline Bancorp i.e., Brookline Bancorp and Eagle Financial go up and down completely randomly.

Pair Corralation between Brookline Bancorp and Eagle Financial

Given the investment horizon of 90 days Brookline Bancorp is expected to generate 12.24 times more return on investment than Eagle Financial. However, Brookline Bancorp is 12.24 times more volatile than Eagle Financial Services. It trades about 0.09 of its potential returns per unit of risk. Eagle Financial Services is currently generating about -0.14 per unit of risk. If you would invest  964.00  in Brookline Bancorp on December 30, 2023 and sell it today you would earn a total of  32.00  from holding Brookline Bancorp or generate 3.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brookline Bancorp  vs.  Eagle Financial Services

 Performance 
       Timeline  
Brookline Bancorp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Brookline Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Eagle Financial Services 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days Eagle Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Eagle Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Brookline Bancorp and Eagle Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookline Bancorp and Eagle Financial

The main advantage of trading using opposite Brookline Bancorp and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookline Bancorp 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 Brookline Bancorp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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