Correlation Between Eagle Bancorp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on Eagle Bancorp and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and KeyCorp.
Diversification Opportunities for Eagle Bancorp and KeyCorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and KeyCorp is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and KeyCorp go up and down completely randomly.
Pair Corralation between Eagle Bancorp and KeyCorp
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 3.37 times less return on investment than KeyCorp. But when comparing it to its historical volatility, Eagle Bancorp Montana is 1.65 times less risky than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,539 in KeyCorp on August 27, 2024 and sell it today you would earn a total of 421.00 from holding KeyCorp or generate 27.36% 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. KeyCorp
Performance |
| Timeline |
| Eagle Bancorp Montana |
| KeyCorp |
Eagle Bancorp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and KeyCorp
The main advantage of trading using opposite Eagle Bancorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Eagle Bancorp vs. Fifth Third Bancorp | Eagle Bancorp vs. Zions Bancorporation | Eagle Bancorp vs. Huntington Bancshares Incorporated | Eagle Bancorp vs. PNC Financial Services |
| KeyCorp vs. Western Alliance Bancorporation | KeyCorp vs. Comerica | KeyCorp vs. Truist Financial Corp | KeyCorp vs. Fifth Third 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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