Correlation Between Banc Of and Enterprise Bancorp
Can any of the company-specific risk be diversified away by investing in both Banc Of and Enterprise 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 Banc Of and Enterprise Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Enterprise Bancorp, you can compare the effects of market volatilities on Banc Of and Enterprise 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 Banc Of with a short position of Enterprise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Enterprise Bancorp.
Diversification Opportunities for Banc Of and Enterprise Bancorp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banc and Enterprise is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp and Banc Of 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 Banc of California are associated (or correlated) with Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of Banc Of i.e., Banc Of and Enterprise Bancorp go up and down completely randomly.
Pair Corralation between Banc Of and Enterprise Bancorp
Assuming the 90 days trading horizon Banc of California is expected to generate 2.05 times more return on investment than Enterprise Bancorp. However, Banc Of is 2.05 times more volatile than Enterprise Bancorp. It trades about 0.04 of its potential returns per unit of risk. Enterprise Bancorp is currently generating about 0.02 per unit of risk. If you would invest 1,497 in Banc of California on August 27, 2024 and sell it today you would earn a total of 959.00 from holding Banc of California or generate 64.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banc of California vs. Enterprise Bancorp
Performance |
| Timeline |
| Banc of California |
| Enterprise Bancorp |
Banc Of and Enterprise Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banc Of and Enterprise Bancorp
The main advantage of trading using opposite Banc Of and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Enterprise 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 Enterprise Bancorp will offset losses from the drop in Enterprise Bancorp's long position.| Banc Of vs. Axos Financial | Banc Of vs. Byline Bancorp | Banc Of vs. KB Financial Group | Banc Of vs. Nu Holdings |
| Enterprise Bancorp vs. Fifth Third Bancorp | Enterprise Bancorp vs. Zions Bancorporation | Enterprise Bancorp vs. Huntington Bancshares Incorporated | Enterprise Bancorp vs. PNC Financial Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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