Correlation Between Enterprise Bancorp and Eagle Financial
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and Eagle 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 Enterprise Bancorp and Eagle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Eagle Financial Services, you can compare the effects of market volatilities on Enterprise Bancorp and Eagle 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 Enterprise Bancorp with a short position of Eagle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Eagle Financial.
Diversification Opportunities for Enterprise Bancorp and Eagle Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enterprise and Eagle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Eagle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Financial Services 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 Eagle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Financial Services has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and Eagle Financial go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Eagle Financial
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 1.23 times more return on investment than Eagle Financial. However, Enterprise Bancorp is 1.23 times more volatile than Eagle Financial Services. It trades about 0.12 of its potential returns per unit of risk. Eagle Financial Services is currently generating about -0.52 per unit of risk. If you would invest 4,228 in Enterprise Bancorp on November 22, 2024 and sell it today you would earn a total of 138.00 from holding Enterprise Bancorp or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Enterprise Bancorp vs. Eagle Financial Services
Performance |
| Timeline |
| Enterprise Bancorp |
| Eagle Financial Services |
Enterprise Bancorp and Eagle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Eagle Financial
The main advantage of trading using opposite Enterprise Bancorp and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, Eagle 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 Eagle Financial will offset losses from the drop in Eagle Financial's long position.| Enterprise Bancorp vs. Home Federal Bancorp | Enterprise Bancorp vs. Lake Shore Bancorp | Enterprise Bancorp vs. Old Point Financial | Enterprise Bancorp vs. Parke Bancorp |
| Eagle Financial vs. Chesapeake Finl Shs | Eagle Financial vs. PSB Holdings | Eagle Financial vs. Farmers Merchants Bancorp | Eagle Financial vs. First Financial |
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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