Correlation Between Eagle Bancorp and Mercantile Bank
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Mercantile Bank 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 Mercantile Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and Mercantile Bank, you can compare the effects of market volatilities on Eagle Bancorp and Mercantile Bank 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 Mercantile Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Mercantile Bank.
Diversification Opportunities for Eagle Bancorp and Mercantile Bank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Mercantile is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercantile Bank 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 Mercantile Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercantile Bank has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Mercantile Bank go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Mercantile Bank
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.16 times more return on investment than Mercantile Bank. However, Eagle Bancorp is 1.16 times more volatile than Mercantile Bank. It trades about 0.22 of its potential returns per unit of risk. Mercantile Bank is currently generating about 0.14 per unit of risk. If you would invest 2,328 in Eagle Bancorp on August 24, 2024 and sell it today you would earn a total of 547.00 from holding Eagle Bancorp or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp vs. Mercantile Bank
Performance |
| Timeline |
| Eagle Bancorp |
| Mercantile Bank |
Eagle Bancorp and Mercantile Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Mercantile Bank
The main advantage of trading using opposite Eagle Bancorp and Mercantile Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Mercantile Bank 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 Mercantile Bank will offset losses from the drop in Mercantile Bank's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |