Correlation Between First Guaranty and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both First Guaranty 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 Guaranty 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 Guaranty Bancshares and Eagle Bancorp Montana, you can compare the effects of market volatilities on First Guaranty 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 Guaranty with a short position of Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Guaranty and Eagle Bancorp.
Diversification Opportunities for First Guaranty and Eagle Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Eagle is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Guaranty 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 First Guaranty 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 Guaranty 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 First Guaranty i.e., First Guaranty and Eagle Bancorp go up and down completely randomly.
Pair Corralation between First Guaranty and Eagle Bancorp
Given the investment horizon of 90 days First Guaranty Bancshares is expected to under-perform the Eagle Bancorp. In addition to that, First Guaranty is 2.67 times more volatile than Eagle Bancorp Montana. It trades about -0.03 of its total potential returns per unit of risk. Eagle Bancorp Montana is currently generating about -0.08 per unit of volatility. If you would invest 1,289 in Eagle Bancorp Montana on January 25, 2024 and sell it today you would lose (19.00) from holding Eagle Bancorp Montana or give up 1.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Guaranty Bancshares vs. Eagle Bancorp Montana
Performance |
Timeline |
First Guaranty Bancshares |
Eagle Bancorp Montana |
First Guaranty and Eagle Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Guaranty and Eagle Bancorp
The main advantage of trading using opposite First Guaranty and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Guaranty 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.First Guaranty vs. Community West Bancshares | First Guaranty vs. HMN Financial | First Guaranty vs. First Northwest Bancorp | First Guaranty vs. Cullman Bancorp |
Eagle Bancorp vs. HMN Financial | Eagle Bancorp vs. Home Federal Bancorp | Eagle Bancorp vs. First Financial Northwest | Eagle Bancorp vs. First Northwest Bancorp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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