Correlation Between Eagle Bancorp and VersaBank
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on Eagle Bancorp and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and VersaBank.
Diversification Opportunities for Eagle Bancorp and VersaBank
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and VersaBank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and VersaBank go up and down completely randomly.
Pair Corralation between Eagle Bancorp and VersaBank
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 2.7 times less return on investment than VersaBank. But when comparing it to its historical volatility, Eagle Bancorp Montana is 1.9 times less risky than VersaBank. It trades about 0.19 of its potential returns per unit of risk. VersaBank is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,328 in VersaBank on August 26, 2024 and sell it today you would earn a total of 384.00 from holding VersaBank or generate 28.92% 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. VersaBank
Performance |
| Timeline |
| Eagle Bancorp Montana |
| VersaBank |
Eagle Bancorp and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and VersaBank
The main advantage of trading using opposite Eagle Bancorp and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank'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 |
| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Village Bank and |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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