Correlation Between Enterprise Bancorp and Chesapeake Finl
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and Chesapeake Finl 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 Enterprise Bancorp and Chesapeake Finl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Chesapeake Finl Shs, you can compare the effects of market volatilities on Enterprise Bancorp and Chesapeake Finl 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 Enterprise Bancorp with a short position of Chesapeake Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Chesapeake Finl.
Diversification Opportunities for Enterprise Bancorp and Chesapeake Finl
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enterprise and Chesapeake is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs and Enterprise 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 Enterprise Bancorp are associated (or correlated) with Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and Chesapeake Finl go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Chesapeake Finl
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 3.68 times more return on investment than Chesapeake Finl. However, Enterprise Bancorp is 3.68 times more volatile than Chesapeake Finl Shs. It trades about 0.22 of its potential returns per unit of risk. Chesapeake Finl Shs is currently generating about 0.06 per unit of risk. If you would invest 3,190 in Enterprise Bancorp on September 1, 2024 and sell it today you would earn a total of 509.00 from holding Enterprise Bancorp or generate 15.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Bancorp vs. Chesapeake Finl Shs
Performance |
| Timeline |
| Enterprise Bancorp |
| Chesapeake Finl Shs |
Enterprise Bancorp and Chesapeake Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Chesapeake Finl
The main advantage of trading using opposite Enterprise Bancorp and Chesapeake Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, Chesapeake Finl 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 Chesapeake Finl will offset losses from the drop in Chesapeake Finl's long position.| Enterprise Bancorp vs. Home Federal Bancorp | Enterprise Bancorp vs. First Northwest Bancorp | Enterprise Bancorp vs. Community West Bancshares | Enterprise Bancorp vs. First Financial Northwest |
| Chesapeake Finl vs. HUMANA INC | Chesapeake Finl vs. SCOR PK | Chesapeake Finl vs. Aquagold International | Chesapeake Finl vs. Thrivent High Yield |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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