Correlation Between Enterprise Bancorp and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and First 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 Enterprise Bancorp and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and First Bancorp, you can compare the effects of market volatilities on Enterprise Bancorp and First 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 Enterprise Bancorp with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and First Bancorp.
Diversification Opportunities for Enterprise Bancorp and First Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and First Bancorp go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and First Bancorp
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 1.08 times more return on investment than First Bancorp. However, Enterprise Bancorp is 1.08 times more volatile than First Bancorp. It trades about 0.21 of its potential returns per unit of risk. First Bancorp is currently generating about 0.23 per unit of risk. If you would invest 3,236 in Enterprise Bancorp on August 28, 2024 and sell it today you would earn a total of 506.00 from holding Enterprise Bancorp or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Bancorp vs. First Bancorp
Performance |
| Timeline |
| Enterprise Bancorp |
| First Bancorp |
Enterprise Bancorp and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and First Bancorp
The main advantage of trading using opposite Enterprise Bancorp and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, First 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 First Bancorp will offset losses from the drop in First Bancorp's long position.| Enterprise Bancorp vs. Fifth Third Bancorp | Enterprise Bancorp vs. Zions Bancorporation | Enterprise Bancorp vs. Huntington Bancshares Incorporated | Enterprise Bancorp vs. Comerica |
| First Bancorp vs. Home Bancorp | First Bancorp vs. First Business Financial | First Bancorp vs. LINKBANCORP | First Bancorp vs. Great Southern 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |