Correlation Between ESSA Bancorp and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Eagle Bancorp 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 ESSA Bancorp and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Eagle Bancorp, you can compare the effects of market volatilities on ESSA Bancorp and Eagle Bancorp 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 ESSA Bancorp with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Eagle Bancorp.
Diversification Opportunities for ESSA Bancorp and Eagle Bancorp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ESSA and Eagle is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and ESSA 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 ESSA Bancorp are associated (or correlated) with Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Eagle Bancorp go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Eagle Bancorp
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 0.72 times more return on investment than Eagle Bancorp. However, ESSA Bancorp is 1.39 times less risky than Eagle Bancorp. It trades about 0.01 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.0 per unit of risk. If you would invest 1,997 in ESSA Bancorp on August 24, 2024 and sell it today you would earn a total of 18.00 from holding ESSA Bancorp or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Eagle Bancorp
Performance |
| Timeline |
| ESSA Bancorp |
| Eagle Bancorp |
ESSA Bancorp and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Eagle Bancorp
The main advantage of trading using opposite ESSA Bancorp and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Eagle Bancorp 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 Eagle Bancorp will offset losses from the drop in Eagle Bancorp's long position.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. United Bankshares | Eagle Bancorp vs. Pacific Premier 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 CEOs Directory module to screen CEOs from public companies around the world.
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