Correlation Between Evans Bancorp and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Evans 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 Evans 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 Evans Bancorp and Eagle Bancorp, you can compare the effects of market volatilities on Evans 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 Evans Bancorp with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evans Bancorp and Eagle Bancorp.
Diversification Opportunities for Evans Bancorp and Eagle Bancorp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evans and Eagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Evans Bancorp and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and Evans 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 Evans 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 Evans Bancorp i.e., Evans Bancorp and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Evans Bancorp and Eagle Bancorp
Given the investment horizon of 90 days Evans Bancorp is expected to generate 1.02 times less return on investment than Eagle Bancorp. But when comparing it to its historical volatility, Evans Bancorp is 1.49 times less risky than Eagle Bancorp. It trades about 0.21 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,737 in Eagle Bancorp on August 24, 2024 and sell it today you would earn a total of 1,138 from holding Eagle Bancorp or generate 65.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evans Bancorp vs. Eagle Bancorp
Performance |
| Timeline |
| Evans Bancorp |
| Eagle Bancorp |
Evans Bancorp and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evans Bancorp and Eagle Bancorp
The main advantage of trading using opposite Evans Bancorp and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evans 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.| Evans Bancorp vs. First Community | Evans Bancorp vs. Oak Valley Bancorp | Evans Bancorp vs. First Financial Northwest | Evans Bancorp vs. ESSA 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 Stocks Directory module to find actively traded stocks across global markets.
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