Correlation Between First Capital and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both First Capital 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 First Capital and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and Eagle Bancorp Montana, you can compare the effects of market volatilities on First Capital 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 First Capital with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and Eagle Bancorp.
Diversification Opportunities for First Capital and Eagle Bancorp
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Eagle is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana and First Capital 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 First Capital 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 Montana has no effect on the direction of First Capital i.e., First Capital and Eagle Bancorp go up and down completely randomly.
Pair Corralation between First Capital and Eagle Bancorp
Given the investment horizon of 90 days First Capital is expected to under-perform the Eagle Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, First Capital is 1.09 times less risky than Eagle Bancorp. The stock trades about -0.05 of its potential returns per unit of risk. The Eagle Bancorp Montana is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,520 in Eagle Bancorp Montana on October 24, 2024 and sell it today you would earn a total of 5.00 from holding Eagle Bancorp Montana or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital vs. Eagle Bancorp Montana
Performance |
| Timeline |
| First Capital |
| Eagle Bancorp Montana |
First Capital and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and Eagle Bancorp
The main advantage of trading using opposite First Capital and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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.| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
| Eagle Bancorp vs. Home Federal Bancorp | Eagle Bancorp vs. First Financial Northwest | Eagle Bancorp vs. First Northwest Bancorp | Eagle Bancorp vs. First Capital |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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