Correlation Between Eagle Bancorp and Magyar Bancorp

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

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

Diversification Opportunities for Eagle Bancorp and Magyar Bancorp

0.09

Correlation Coefficient

Eagle Bancorp  Magyar Bancorp

Significant diversification

The 3 months correlation between Eagle and Magyar is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Magyar Bancorp go up and down completely randomly.

Pair Corralation between Eagle Bancorp and Magyar Bancorp

Given the investment horizon of 90 days Eagle Bancorp is expected to under-perform the Magyar Bancorp. In addition to that, Eagle Bancorp is 1.37 times more volatile than Magyar Bancorp. It trades about -0.15 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about 0.0 per unit of volatility. If you would invest  1,459  in Magyar Bancorp on December 20, 2024 and sell it today you would lose (10.00) from holding Magyar Bancorp or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Eagle Bancorp  vs.  Magyar Bancorp

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.

Magyar Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magyar Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Magyar Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eagle Bancorp and Magyar Bancorp

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

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