Correlation Between Bank Rakyat and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and ENB 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 Bank Rakyat and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and ENB Financial Corp, you can compare the effects of market volatilities on Bank Rakyat and ENB 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 Bank Rakyat with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and ENB Financial.
Diversification Opportunities for Bank Rakyat and ENB Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and ENB is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and ENB Financial go up and down completely randomly.
Pair Corralation between Bank Rakyat and ENB Financial
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the ENB Financial. In addition to that, Bank Rakyat is 1.95 times more volatile than ENB Financial Corp. It trades about -0.22 of its total potential returns per unit of risk. ENB Financial Corp is currently generating about 0.0 per unit of volatility. If you would invest 1,682 in ENB Financial Corp on November 27, 2024 and sell it today you would lose (2.00) from holding ENB Financial Corp or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. ENB Financial Corp
Performance |
| Timeline |
| Bank Rakyat |
| ENB Financial Corp |
Bank Rakyat and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and ENB Financial
The main advantage of trading using opposite Bank Rakyat and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, ENB 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
| ENB Financial vs. Potomac Bancshares | ENB Financial vs. Apollo Bancorp | ENB Financial vs. The Farmers Bank | ENB Financial vs. 1ST SUMMIT BANCORP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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