Correlation Between Eagle Bancorp and US Century

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

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

Diversification Opportunities for Eagle Bancorp and US Century

0.23

Correlation Coefficient

Eagle Bancorp  US Century

Modest diversification

The 3 months correlation between Eagle and USCB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp and US Century Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Century Bank 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 US Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Century Bank has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and US Century go up and down completely randomly.

Pair Corralation between Eagle Bancorp and US Century

Given the investment horizon of 90 days Eagle Bancorp is expected to under-perform the US Century. In addition to that, Eagle Bancorp is 1.09 times more volatile than US Century Bank. It trades about -0.14 of its total potential returns per unit of risk. US Century Bank is currently generating about 0.07 per unit of volatility. If you would invest  1,762  in US Century Bank on December 27, 2024 and sell it today you would earn a total of  131.00  from holding US Century Bank or generate 7.43% return on investment over 90 days.

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

Eagle Bancorp  vs.  US Century Bank

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.

US Century Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US Century Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, US Century may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eagle Bancorp and US Century

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

The idea behind Eagle Bancorp and US Century Bank 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.