Correlation Between Eagle Bancorp and CullenFrost Bankers

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

Diversification Opportunities for Eagle Bancorp and CullenFrost Bankers

-0.4

Correlation Coefficient

Eagle Bancorp  CullenFrost Bankers

Very good diversification

The 3 months correlation between Eagle and CullenFrost is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and CullenFrost Bankers go up and down completely randomly.

Pair Corralation between Eagle Bancorp and CullenFrost Bankers

Given the investment horizon of 90 days Eagle Bancorp Montana is expected to generate 1.11 times more return on investment than CullenFrost Bankers. However, Eagle Bancorp is 1.11 times more volatile than CullenFrost Bankers. It trades about 0.12 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about -0.07 per unit of risk. If you would invest  1,484  in Eagle Bancorp Montana on December 29, 2024 and sell it today you would earn a total of  186.00  from holding Eagle Bancorp Montana or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagle Bancorp Montana  vs.  CullenFrost Bankers

Eagle Bancorp Montana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Bancorp Montana are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Eagle Bancorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

CullenFrost Bankers

Risk-Adjusted Performance

Very Weak

Over the last 90 days CullenFrost Bankers has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Eagle Bancorp and CullenFrost Bankers

The main advantage of trading using opposite Eagle Bancorp and CullenFrost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Bancorp position performs unexpectedly, CullenFrost Bankers 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 CullenFrost Bankers will offset losses from the drop in CullenFrost Bankers' long position.

The idea behind Eagle Bancorp Montana and CullenFrost Bankers 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 Stocks Directory module to find actively traded stocks across global markets.