Correlation Between Eagle Bancorp and City Holding
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and City Holding 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 Eagle Bancorp and City Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp Montana and City Holding, you can compare the effects of market volatilities on Eagle Bancorp and City Holding 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 Eagle Bancorp with a short position of City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and City Holding.
Diversification Opportunities for Eagle Bancorp and City Holding
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and City is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding and Eagle 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 Eagle Bancorp Montana are associated (or correlated) with City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and City Holding go up and down completely randomly.
Pair Corralation between Eagle Bancorp and City Holding
Given the investment horizon of 90 days Eagle Bancorp Montana is expected to generate 0.76 times more return on investment than City Holding. However, Eagle Bancorp Montana is 1.32 times less risky than City Holding. It trades about 0.13 of its potential returns per unit of risk. City Holding is currently generating about 0.08 per unit of risk. If you would invest 1,286 in Eagle Bancorp Montana on September 1, 2024 and sell it today you would earn a total of 454.00 from holding Eagle Bancorp Montana or generate 35.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp Montana vs. City Holding
Performance |
| Timeline |
| Eagle Bancorp Montana |
| City Holding |
Eagle Bancorp and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and City Holding
The main advantage of trading using opposite Eagle Bancorp and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding's long position.| Eagle Bancorp vs. Home Federal Bancorp | Eagle Bancorp vs. First Financial Northwest | Eagle Bancorp vs. First Northwest Bancorp | Eagle Bancorp vs. First Capital |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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