Correlation Between Eagle Bancorp and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and ECB Bancorp 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 ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and ECB Bancorp, you can compare the effects of market volatilities on Eagle Bancorp and ECB Bancorp 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 ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and ECB Bancorp.
Diversification Opportunities for Eagle Bancorp and ECB Bancorp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and ECB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and ECB Bancorp go up and down completely randomly.
Pair Corralation between Eagle Bancorp and ECB Bancorp
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 3.14 times more return on investment than ECB Bancorp. However, Eagle Bancorp is 3.14 times more volatile than ECB Bancorp. It trades about 0.15 of its potential returns per unit of risk. ECB Bancorp is currently generating about -0.02 per unit of risk. If you would invest 2,662 in Eagle Bancorp on August 27, 2024 and sell it today you would earn a total of 279.00 from holding Eagle Bancorp or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp vs. ECB Bancorp
Performance |
| Timeline |
| Eagle Bancorp |
| ECB Bancorp |
Eagle Bancorp and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and ECB Bancorp
The main advantage of trading using opposite Eagle Bancorp and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, ECB Bancorp 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| ECB Bancorp vs. Fifth Third Bancorp | ECB Bancorp vs. Zions Bancorporation | ECB Bancorp vs. Huntington Bancshares Incorporated | ECB Bancorp vs. PNC Financial Services |
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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