Correlation Between Enterprise Bancorp and First State
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and First State 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 State 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 State Financial, you can compare the effects of market volatilities on Enterprise Bancorp and First State 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 State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and First State.
Diversification Opportunities for Enterprise Bancorp and First State
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and First State Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First State Financial 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 State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First State Financial has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and First State go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and First State
If you would invest 3,018 in Enterprise Bancorp on August 31, 2024 and sell it today you would earn a total of 625.00 from holding Enterprise Bancorp or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.59% |
| Values | Daily Returns |
Enterprise Bancorp vs. First State Financial
Performance |
| Timeline |
| Enterprise Bancorp |
| First State Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Enterprise Bancorp and First State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and First State
The main advantage of trading using opposite Enterprise Bancorp and First State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, First State 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 State will offset losses from the drop in First State'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 |
| First State vs. First Interstate BancSystem | First State vs. First Financial Bankshares | First State vs. Independent Bank Group | First State vs. CVB 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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