Correlation Between Eagle Bancorp and Community Trust
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Community Trust 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 Community Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and Community Trust Bancorp, you can compare the effects of market volatilities on Eagle Bancorp and Community Trust 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 Community Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Community Trust.
Diversification Opportunities for Eagle Bancorp and Community Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and Community is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and Community Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Trust Bancorp 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 Community Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Trust Bancorp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Community Trust go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Community Trust
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.07 times less return on investment than Community Trust. But when comparing it to its historical volatility, Eagle Bancorp is 1.07 times less risky than Community Trust. It trades about 0.14 of its potential returns per unit of risk. Community Trust Bancorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,273 in Community Trust Bancorp on August 31, 2024 and sell it today you would earn a total of 620.00 from holding Community Trust Bancorp or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eagle Bancorp vs. Community Trust Bancorp
Performance |
| Timeline |
| Eagle Bancorp |
| Community Trust Bancorp |
Eagle Bancorp and Community Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Community Trust
The main advantage of trading using opposite Eagle Bancorp and Community Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Community Trust 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 Community Trust will offset losses from the drop in Community Trust's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust Bancshares |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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