Correlation Between Eagle Bancorp and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Citizens 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 Eagle Bancorp and Citizens Financial 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 Citizens Financial Services, you can compare the effects of market volatilities on Eagle Bancorp and Citizens 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 Eagle Bancorp with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Citizens Financial.
Diversification Opportunities for Eagle Bancorp and Citizens Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and Citizens is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Citizens Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Citizens Financial go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Citizens Financial
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.31 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, Eagle Bancorp Montana is 1.66 times less risky than Citizens Financial. It trades about 0.02 of its potential returns per unit of risk. Citizens Financial Services is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,815 in Citizens Financial Services on September 3, 2024 and sell it today you would earn a total of 246.00 from holding Citizens Financial Services or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp Montana vs. Citizens Financial Services
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Citizens Financial |
Eagle Bancorp and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Citizens Financial
The main advantage of trading using opposite Eagle Bancorp and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Citizens 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Eagle Bancorp vs. JPMorgan Chase Co | Eagle Bancorp vs. Citigroup | Eagle Bancorp vs. Wells Fargo | Eagle Bancorp vs. Toronto Dominion Bank |
| Citizens Financial vs. Home Federal Bancorp | Citizens Financial vs. Community West Bancshares | Citizens Financial vs. Magyar Bancorp | Citizens Financial vs. Finward 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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