Correlation Between Enterprise Bancorp and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and Independent Bank 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 Independent Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Independent Bank, you can compare the effects of market volatilities on Enterprise Bancorp and Independent Bank 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Independent Bank.
Diversification Opportunities for Enterprise Bancorp and Independent Bank
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and Independent is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and Independent Bank go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Independent Bank
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 0.94 times more return on investment than Independent Bank. However, Enterprise Bancorp is 1.07 times less risky than Independent Bank. It trades about 0.19 of its potential returns per unit of risk. Independent Bank is currently generating about 0.18 per unit of risk. If you would invest 3,192 in Enterprise Bancorp on August 31, 2024 and sell it today you would earn a total of 451.00 from holding Enterprise Bancorp or generate 14.13% 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. Independent Bank
Performance |
| Timeline |
| Enterprise Bancorp |
| Independent Bank |
Enterprise Bancorp and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Independent Bank
The main advantage of trading using opposite Enterprise Bancorp and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank'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 |
| Independent Bank vs. First Northwest Bancorp | Independent Bank vs. Community West Bancshares | Independent Bank vs. First Financial Northwest | Independent Bank 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |