Correlation Between Eagle Bancorp and Union Bankshares
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Union Bankshares 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 Union Bankshares 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 Union Bankshares, you can compare the effects of market volatilities on Eagle Bancorp and Union Bankshares 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 Union Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Union Bankshares.
Diversification Opportunities for Eagle Bancorp and Union Bankshares
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Union is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares 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 Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Union Bankshares go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Union Bankshares
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.01 times less return on investment than Union Bankshares. But when comparing it to its historical volatility, Eagle Bancorp Montana is 1.89 times less risky than Union Bankshares. It trades about 0.25 of its potential returns per unit of risk. Union Bankshares is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,646 in Union Bankshares on August 28, 2024 and sell it today you would earn a total of 477.00 from holding Union Bankshares or generate 18.03% 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. Union Bankshares
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Union Bankshares |
Eagle Bancorp and Union Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Union Bankshares
The main advantage of trading using opposite Eagle Bancorp and Union Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Union Bankshares 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 Union Bankshares will offset losses from the drop in Union Bankshares' long position.| Eagle Bancorp vs. Fifth Third Bancorp | Eagle Bancorp vs. Huntington Bancshares Incorporated | Eagle Bancorp vs. MT Bank |
| Union Bankshares vs. Fifth Third Bancorp | Union Bankshares vs. Huntington Bancshares Incorporated | Union Bankshares vs. MT Bank |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |