Correlation Between Prosperity Bancshares and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Eagle Bancorp Montana, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Eagle Bancorp.
Diversification Opportunities for Prosperity Bancshares and Eagle Bancorp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosperity and Eagle is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Eagle Bancorp
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.97 times more return on investment than Eagle Bancorp. However, Prosperity Bancshares is 1.03 times less risky than Eagle Bancorp. It trades about 0.04 of its potential returns per unit of risk. Eagle Bancorp Montana is currently generating about 0.02 per unit of risk. If you would invest 6,639 in Prosperity Bancshares on August 30, 2024 and sell it today you would earn a total of 1,778 from holding Prosperity Bancshares or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Eagle Bancorp Montana
Performance |
| Timeline |
| Prosperity Bancshares |
| Eagle Bancorp Montana |
Prosperity Bancshares and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Eagle Bancorp
The main advantage of trading using opposite Prosperity Bancshares and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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