Correlation Between Eagle Bancorp and First Foundation
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and First Foundation 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 First Foundation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and First Foundation, you can compare the effects of market volatilities on Eagle Bancorp and First Foundation 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 First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and First Foundation.
Diversification Opportunities for Eagle Bancorp and First Foundation
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation 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 First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and First Foundation go up and down completely randomly.
Pair Corralation between Eagle Bancorp and First Foundation
Given the investment horizon of 90 days Eagle Bancorp is expected to under-perform the First Foundation. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Bancorp is 1.56 times less risky than First Foundation. The stock trades about 0.0 of its potential returns per unit of risk. The First Foundation is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,414 in First Foundation on September 3, 2024 and sell it today you would lose (619.00) from holding First Foundation or give up 43.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp vs. First Foundation
Performance |
| Timeline |
| Eagle Bancorp |
| First Foundation |
Eagle Bancorp and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and First Foundation
The main advantage of trading using opposite Eagle Bancorp and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, First Foundation 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 First Foundation will offset losses from the drop in First Foundation's long position.| Eagle Bancorp vs. JPMorgan Chase Co | Eagle Bancorp vs. Citigroup | Eagle Bancorp vs. Wells Fargo | Eagle Bancorp vs. Toronto Dominion Bank |
| First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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