Correlation Between Heritage Financial and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Heritage Financial 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 Heritage Financial and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and Eagle Bancorp, you can compare the effects of market volatilities on Heritage Financial 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 Heritage Financial with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and Eagle Bancorp.
Diversification Opportunities for Heritage Financial and Eagle Bancorp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heritage and Eagle is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and Heritage Financial 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 Heritage Financial 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 Heritage Financial i.e., Heritage Financial and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Heritage Financial and Eagle Bancorp
Given the investment horizon of 90 days Heritage Financial is expected to generate 1.02 times more return on investment than Eagle Bancorp. However, Heritage Financial is 1.02 times more volatile than Eagle Bancorp. It trades about 0.23 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.17 per unit of risk. If you would invest 2,275 in Heritage Financial on August 27, 2024 and sell it today you would earn a total of 403.00 from holding Heritage Financial or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. Eagle Bancorp
Performance |
| Timeline |
| Heritage Financial |
| Eagle Bancorp |
Heritage Financial and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and Eagle Bancorp
The main advantage of trading using opposite Heritage Financial and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial 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.| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
| Eagle Bancorp vs. Fifth Third Bancorp | Eagle Bancorp vs. Zions Bancorporation | Eagle Bancorp vs. Huntington Bancshares Incorporated | Eagle Bancorp vs. Comerica |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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