Correlation Between Eagle Bancorp and Huntington Bancshares
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Huntington Bancshares 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 Huntington Bancshares 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 Huntington Bancshares Incorporated, you can compare the effects of market volatilities on Eagle Bancorp and Huntington Bancshares 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 Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Huntington Bancshares.
Diversification Opportunities for Eagle Bancorp and Huntington Bancshares
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and Huntington is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Huntington Bancshares go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Huntington Bancshares
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 9.39 times less return on investment than Huntington Bancshares. But when comparing it to its historical volatility, Eagle Bancorp Montana is 2.4 times less risky than Huntington Bancshares. It trades about 0.05 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,554 in Huntington Bancshares Incorporated on August 24, 2024 and sell it today you would earn a total of 208.00 from holding Huntington Bancshares Incorporated or generate 13.38% 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. Huntington Bancshares Incorpor
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Huntington Bancshares |
Eagle Bancorp and Huntington Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Huntington Bancshares
The main advantage of trading using opposite Eagle Bancorp and Huntington Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Huntington Bancshares 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 Huntington Bancshares will offset losses from the drop in Huntington Bancshares' 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 |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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