Correlation Between Eagle Bancorp and BFC Capital
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and BFC Capital 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 BFC Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and BFC Capital Trust, you can compare the effects of market volatilities on Eagle Bancorp and BFC Capital 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 BFC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and BFC Capital.
Diversification Opportunities for Eagle Bancorp and BFC Capital
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and BFC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and BFC Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFC Capital Trust 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 are associated (or correlated) with BFC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFC Capital Trust has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and BFC Capital go up and down completely randomly.
Pair Corralation between Eagle Bancorp and BFC Capital
Given the investment horizon of 90 days Eagle Bancorp is expected to under-perform the BFC Capital. In addition to that, Eagle Bancorp is 1.05 times more volatile than BFC Capital Trust. It trades about 0.0 of its total potential returns per unit of risk. BFC Capital Trust is currently generating about 0.01 per unit of volatility. If you would invest 2,900 in BFC Capital Trust on August 31, 2024 and sell it today you would lose (330.00) from holding BFC Capital Trust or give up 11.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.87% |
| Values | Daily Returns |
Eagle Bancorp vs. BFC Capital Trust
Performance |
| Timeline |
| Eagle Bancorp |
| BFC Capital Trust |
Eagle Bancorp and BFC Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and BFC Capital
The main advantage of trading using opposite Eagle Bancorp and BFC Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, BFC Capital 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 BFC Capital will offset losses from the drop in BFC Capital's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| BFC Capital vs. Popular Capital Trust | BFC Capital vs. CHS Inc CN | BFC Capital vs. Wintrust Financial Corp | BFC Capital vs. Auburn National Bancorporation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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