Correlation Between Eagle Bancorp and Kearny Financial

Can any of the company-specific risk be diversified away by investing in both Eagle Bancorp and Kearny Financial 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 Kearny Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Bancorp and Kearny Financial Corp, you can compare the effects of market volatilities on Eagle Bancorp and Kearny Financial 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 Kearny Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Bancorp and Kearny Financial.

Diversification Opportunities for Eagle Bancorp and Kearny Financial

0.87

Correlation Coefficient

Eagle Bancorp  Kearny Financial

Very poor diversification

The 3 months correlation between Eagle and Kearny is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp 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 are associated (or correlated) with Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Kearny Financial go up and down completely randomly.

Pair Corralation between Eagle Bancorp and Kearny Financial

Given the investment horizon of 90 days Eagle Bancorp is expected to under-perform the Kearny Financial. In addition to that, Eagle Bancorp is 1.02 times more volatile than Kearny Financial Corp. It trades about -0.13 of its total potential returns per unit of risk. Kearny Financial Corp is currently generating about -0.05 per unit of volatility. If you would invest  692.00  in Kearny Financial Corp on December 28, 2024 and sell it today you would lose (52.00) from holding Kearny Financial Corp or give up 7.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Eagle Bancorp  vs.  Kearny Financial Corp

Eagle Bancorp

Risk-Adjusted Performance

Very Weak

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 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kearny Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kearny Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eagle Bancorp and Kearny Financial

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

The idea behind Eagle Bancorp and Kearny Financial Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..