Correlation Between Eagle Bancorp and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Heartland 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 Heartland 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 Heartland Financial USA, you can compare the effects of market volatilities on Eagle Bancorp and Heartland 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Heartland Financial.
Diversification Opportunities for Eagle Bancorp and Heartland Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and Heartland is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Heartland Financial go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Heartland Financial
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 2.73 times less return on investment than Heartland Financial. But when comparing it to its historical volatility, Eagle Bancorp Montana is 1.52 times less risky than Heartland Financial. It trades about 0.06 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,067 in Heartland Financial USA on August 31, 2024 and sell it today you would earn a total of 3,690 from holding Heartland Financial USA or generate 120.31% 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. Heartland Financial USA
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Heartland Financial USA |
Eagle Bancorp and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Heartland Financial
The main advantage of trading using opposite Eagle Bancorp and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Heartland 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 Heartland Financial will offset losses from the drop in Heartland Financial'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 |
| Heartland Financial vs. Heritage Commerce Corp | Heartland Financial vs. Business First Bancshares | Heartland Financial vs. German American Bancorp | Heartland Financial vs. Texas Capital Bancshares |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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