Correlation Between Eastern Bankshares and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Eastern Bankshares and Texas Capital 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 Eastern Bankshares and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Bankshares and Texas Capital Bancshares, you can compare the effects of market volatilities on Eastern Bankshares and Texas Capital 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 Eastern Bankshares with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Bankshares and Texas Capital.
Diversification Opportunities for Eastern Bankshares and Texas Capital
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastern and Texas is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Bankshares and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and Eastern Bankshares 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 Eastern Bankshares are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Eastern Bankshares i.e., Eastern Bankshares and Texas Capital go up and down completely randomly.
Pair Corralation between Eastern Bankshares and Texas Capital
Considering the 90-day investment horizon Eastern Bankshares is expected to generate 1.66 times more return on investment than Texas Capital. However, Eastern Bankshares is 1.66 times more volatile than Texas Capital Bancshares. It trades about 0.08 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.06 per unit of risk. If you would invest 1,199 in Eastern Bankshares on September 14, 2024 and sell it today you would earn a total of 595.00 from holding Eastern Bankshares or generate 49.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Bankshares vs. Texas Capital Bancshares
Performance |
| Timeline |
| Eastern Bankshares |
| Texas Capital Bancshares |
Eastern Bankshares and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Bankshares and Texas Capital
The main advantage of trading using opposite Eastern Bankshares and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Bankshares position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| Eastern Bankshares vs. Comerica | Eastern Bankshares vs. Fifth Third Bancorp | Eastern Bankshares vs. Zions Bancorporation | Eastern Bankshares vs. PNC Financial Services |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |