Correlation Between Eagle Bancorp and Virginia National
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Virginia National 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 Virginia National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and Virginia National Bankshares, you can compare the effects of market volatilities on Eagle Bancorp and Virginia National 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 Virginia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Virginia National.
Diversification Opportunities for Eagle Bancorp and Virginia National
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Virginia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Virginia National go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Virginia National
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.99 times more return on investment than Virginia National. However, Eagle Bancorp is 1.99 times more volatile than Virginia National Bankshares. It trades about 0.21 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.05 per unit of risk. If you would invest 2,166 in Eagle Bancorp on August 26, 2024 and sell it today you would earn a total of 775.00 from holding Eagle Bancorp or generate 35.78% 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. Virginia National Bankshares
Performance |
| Timeline |
| Eagle Bancorp |
| Virginia National |
Eagle Bancorp and Virginia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Virginia National
The main advantage of trading using opposite Eagle Bancorp and Virginia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Virginia National 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 Virginia National will offset losses from the drop in Virginia National's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| Virginia National vs. Fifth Third Bancorp | Virginia National vs. Zions Bancorporation | Virginia National vs. Huntington Bancshares Incorporated | Virginia National 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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