Correlation Between Eagle Bancorp and West Bancorporation
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and West Bancorporation 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 West Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp and West Bancorporation, you can compare the effects of market volatilities on Eagle Bancorp and West Bancorporation 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 West Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and West Bancorporation.
Diversification Opportunities for Eagle Bancorp and West Bancorporation
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and West is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and West Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Bancorporation 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 West Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Bancorporation has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and West Bancorporation go up and down completely randomly.
Pair Corralation between Eagle Bancorp and West Bancorporation
Given the investment horizon of 90 days Eagle Bancorp is expected to generate 1.2 times more return on investment than West Bancorporation. However, Eagle Bancorp is 1.2 times more volatile than West Bancorporation. It trades about 0.17 of its potential returns per unit of risk. West Bancorporation is currently generating about 0.19 per unit of risk. If you would invest 2,621 in Eagle Bancorp on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Eagle Bancorp or generate 12.02% 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. West Bancorp.
Performance |
| Timeline |
| Eagle Bancorp |
| West Bancorporation |
Eagle Bancorp and West Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and West Bancorporation
The main advantage of trading using opposite Eagle Bancorp and West Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, West Bancorporation 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 West Bancorporation will offset losses from the drop in West Bancorporation's long position.| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier Bancorp |
| West Bancorporation vs. MidWestOne Financial Group | West Bancorporation vs. Washington Trust Bancorp | West Bancorporation vs. Univest Pennsylvania | West Bancorporation vs. Sierra Bancorp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |