Correlation Between Eagle Bancorp and VersaBank
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and VersaBank 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 VersaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and VersaBank, you can compare the effects of market volatilities on Eagle Bancorp and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and VersaBank.
Diversification Opportunities for Eagle Bancorp and VersaBank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and VersaBank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and VersaBank go up and down completely randomly.
Pair Corralation between Eagle Bancorp and VersaBank
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.66 times more return on investment than VersaBank. However, Eagle Bancorp is 1.66 times more volatile than VersaBank. It trades about 0.21 of its potential returns per unit of risk. VersaBank is currently generating about 0.28 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp vs. VersaBank
Performance |
| Timeline |
| Eagle Bancorp |
| VersaBank |
Eagle Bancorp and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and VersaBank
The main advantage of trading using opposite Eagle Bancorp and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Village Bank and |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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