Correlation Between Commerce Bancshares and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Commerce Bancshares and Eagle Bancorp 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 Commerce Bancshares and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Bancshares and Eagle Bancorp, you can compare the effects of market volatilities on Commerce Bancshares and Eagle Bancorp 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 Commerce Bancshares with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and Eagle Bancorp.
Diversification Opportunities for Commerce Bancshares and Eagle Bancorp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commerce and Eagle is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Commerce Bancshares and Eagle Bancorp
Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.73 times more return on investment than Eagle Bancorp. However, Commerce Bancshares is 1.37 times less risky than Eagle Bancorp. It trades about 0.28 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.14 per unit of risk. If you would invest 6,358 in Commerce Bancshares on August 31, 2024 and sell it today you would earn a total of 1,030 from holding Commerce Bancshares or generate 16.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Commerce Bancshares vs. Eagle Bancorp
Performance |
Timeline |
Commerce Bancshares |
Eagle Bancorp |
Commerce Bancshares and Eagle Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Commerce Bancshares and Eagle Bancorp
The main advantage of trading using opposite Commerce Bancshares and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares position performs unexpectedly, Eagle Bancorp 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 Bancorp will offset losses from the drop in Eagle Bancorp's long position.Commerce Bancshares vs. BOK Financial | Commerce Bancshares vs. Texas Capital Bancshares | Commerce Bancshares vs. United Bankshares | Commerce Bancshares vs. Prosperity Bancshares |
Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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