Correlation Between First Midwest and Eagle Bancorp

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Can any of the company-specific risk be diversified away by investing in both First Midwest 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 Midwest 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 Midwest Bancorp and Eagle Bancorp, you can compare the effects of market volatilities on First Midwest 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 Midwest with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Midwest and Eagle Bancorp.

Diversification Opportunities for First Midwest and Eagle Bancorp

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between First and Eagle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Midwest Bancorp and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and First Midwest 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 Midwest 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 First Midwest i.e., First Midwest and Eagle Bancorp go up and down completely randomly.

Pair Corralation between First Midwest and Eagle Bancorp

If you would invest  2,308  in Eagle Bancorp on December 30, 2023 and sell it today you would earn a total of  41.00  from holding Eagle Bancorp or generate 1.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

First Midwest Bancorp  vs.  Eagle Bancorp

 Performance 
       Timeline  
First Midwest Bancorp 

Risk-Adjusted Performance

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Over the last 90 days First Midwest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, First Midwest is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Eagle Bancorp 

Risk-Adjusted Performance

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Over the last 90 days Eagle Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

First Midwest and Eagle Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Midwest and Eagle Bancorp

The main advantage of trading using opposite First Midwest and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Midwest 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.
The idea behind First Midwest Bancorp and Eagle 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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