Correlation Between Eagle Bancorp and Bancolombia

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

Diversification Opportunities for Eagle Bancorp and Bancolombia

-0.5

Correlation Coefficient

Eagle Bancorp  Bancolombia

Very good diversification

The 3 months correlation between Eagle and Bancolombia is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bancorp Montana and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR 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 Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of Eagle Bancorp i.e., Eagle Bancorp and Bancolombia go up and down completely randomly.

Pair Corralation between Eagle Bancorp and Bancolombia

Given the investment horizon of 90 days Eagle Bancorp Montana is expected to generate 0.43 times more return on investment than Bancolombia. However, Eagle Bancorp Montana is 2.35 times less risky than Bancolombia. It trades about 0.0 of its potential returns per unit of risk. Bancolombia SA ADR is currently generating about -0.1 per unit of risk. If you would invest  1,278  in Eagle Bancorp Montana on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Eagle Bancorp Montana or generate 0.0% 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.  Bancolombia SA ADR

Eagle Bancorp Montana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Bancorp Montana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bancolombia SA ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bancolombia SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile forward indicators, Bancolombia may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Eagle Bancorp and Bancolombia

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

The idea behind Eagle Bancorp Montana and Bancolombia SA ADR 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.