Correlation Between Origin Materials and Eagle Financial

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

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

Diversification Opportunities for Origin Materials and Eagle Financial

-0.61

Correlation Coefficient

Origin Materials  Eagle Financial

Excellent diversification

The 3 months correlation between Origin and Eagle is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials 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 Origin Materials 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 Origin Materials 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 Origin Materials i.e., Origin Materials and Eagle Financial go up and down completely randomly.

Pair Corralation between Origin Materials and Eagle Financial

Given the investment horizon of 90 days Origin Materials is expected to under-perform the Eagle Financial. In addition to that, Origin Materials is 2.21 times more volatile than Eagle Financial Services. It trades about -0.02 of its total potential returns per unit of risk. Eagle Financial Services is currently generating about 0.0 per unit of volatility. If you would invest  3,343  in Eagle Financial Services on February 10, 2024 and sell it today you would lose (493.00) from holding Eagle Financial Services or give up 14.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.07%
Values	Daily Returns

Origin Materials  vs.  Eagle Financial Services

Origin Materials

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Origin Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Eagle Financial Services

Risk-Adjusted Performance

0 of 100

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 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.

Pair Trading with Origin Materials and Eagle Financial

The main advantage of trading using opposite Origin Materials and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials 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 Origin Materials 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.