Correlation Between Eagle Bancorp and Veritex Holdings
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings, you can compare the effects of market volatilities on Eagle Bancorp and Veritex Holdings 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 Veritex Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Veritex Holdings.
Diversification Opportunities for Eagle Bancorp and Veritex Holdings
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and Veritex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Veritex Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veritex Holdings 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 Veritex Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veritex Holdings has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Veritex Holdings go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Veritex Holdings
Given the investment horizon of 90 days Eagle Bancorp Montana is expected to generate 1.21 times more return on investment than Veritex Holdings. However, Eagle Bancorp is 1.21 times more volatile than Veritex Holdings. It trades about 0.26 of its potential returns per unit of risk. Veritex Holdings is currently generating about 0.05 per unit of risk. If you would invest 1,525 in Eagle Bancorp Montana on November 18, 2024 and sell it today you would earn a total of 174.00 from holding Eagle Bancorp Montana or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp Montana vs. Veritex Holdings
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Veritex Holdings |
Eagle Bancorp and Veritex Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Veritex Holdings
The main advantage of trading using opposite Eagle Bancorp and Veritex Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Veritex Holdings 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 Veritex Holdings will offset losses from the drop in Veritex Holdings' long position.| Eagle Bancorp vs. Home Federal Bancorp | Eagle Bancorp vs. Lake Shore Bancorp | Eagle Bancorp vs. Old Point Financial | Eagle Bancorp vs. Parke Bancorp |
| Veritex Holdings vs. Finward Bancorp | Veritex Holdings vs. Franklin Financial Services | Veritex Holdings vs. Home Bancorp | Veritex Holdings vs. LINKBANCORP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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