Correlation Between Eagle Bancorp and Glacier Bancorp
Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Glacier 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 Eagle Bancorp and Glacier Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Bancorp Montana and Glacier Bancorp, you can compare the effects of market volatilities on Eagle Bancorp and Glacier 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 Eagle Bancorp with a short position of Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Glacier Bancorp.
Diversification Opportunities for Eagle Bancorp and Glacier Bancorp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Glacier is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp and Eagle 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 Eagle Bancorp Montana are associated (or correlated) with Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Glacier Bancorp go up and down completely randomly.
Pair Corralation between Eagle Bancorp and Glacier Bancorp
Given the investment horizon of 90 days Eagle Bancorp Montana is expected to under-perform the Glacier Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Bancorp Montana is 2.69 times less risky than Glacier Bancorp. The stock trades about -0.14 of its potential returns per unit of risk. The Glacier Bancorp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,707 in Glacier Bancorp on January 16, 2024 and sell it today you would lose (92.00) from holding Glacier Bancorp or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Bancorp Montana vs. Glacier Bancorp
Performance |
| Timeline |
| Eagle Bancorp Montana |
| Glacier Bancorp |
Eagle Bancorp and Glacier Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Bancorp and Glacier Bancorp
The main advantage of trading using opposite Eagle Bancorp and Glacier Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, Glacier 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 Glacier Bancorp will offset losses from the drop in Glacier Bancorp's long position.The idea behind Eagle Bancorp Montana and Glacier Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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