Correlation Between Enterprise Bancorp and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and KeyCorp, you can compare the effects of market volatilities on Enterprise Bancorp and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and KeyCorp.
Diversification Opportunities for Enterprise Bancorp and KeyCorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and KeyCorp is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and KeyCorp go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and KeyCorp
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 4.21 times more return on investment than KeyCorp. However, Enterprise Bancorp is 4.21 times more volatile than KeyCorp. It trades about 0.17 of its potential returns per unit of risk. KeyCorp is currently generating about 0.08 per unit of risk. If you would invest 3,230 in Enterprise Bancorp on August 30, 2024 and sell it today you would earn a total of 413.00 from holding Enterprise Bancorp or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Bancorp vs. KeyCorp
Performance |
| Timeline |
| Enterprise Bancorp |
| KeyCorp |
Enterprise Bancorp and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and KeyCorp
The main advantage of trading using opposite Enterprise Bancorp and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp'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 |
| KeyCorp vs. KeyCorp | KeyCorp vs. Regions Financial | KeyCorp vs. US Bancorp | KeyCorp vs. Fifth Third 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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