Correlation Between Glacier Bancorp and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Glacier Bancorp 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 Glacier Bancorp and Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glacier Bancorp and Eagle Bancorp, you can compare the effects of market volatilities on Glacier Bancorp 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 Glacier Bancorp with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glacier Bancorp and Eagle Bancorp.
Diversification Opportunities for Glacier Bancorp and Eagle Bancorp
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Glacier and Eagle is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Glacier Bancorp and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp and Glacier 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 Glacier 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 Glacier Bancorp i.e., Glacier Bancorp and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Glacier Bancorp and Eagle Bancorp
Given the investment horizon of 90 days Glacier Bancorp is expected to generate 0.97 times more return on investment than Eagle Bancorp. However, Glacier Bancorp is 1.03 times less risky than Eagle Bancorp. It trades about -0.04 of its potential returns per unit of risk. Eagle Bancorp is currently generating about -0.04 per unit of risk. If you would invest 3,707 in Glacier Bancorp on January 17, 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 |
Glacier Bancorp vs. Eagle Bancorp
Performance |
| Timeline |
| Glacier Bancorp |
| Eagle Bancorp |
Glacier Bancorp and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glacier Bancorp and Eagle Bancorp
The main advantage of trading using opposite Glacier Bancorp and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glacier Bancorp 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 Glacier 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.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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