Correlation Between Enterprise Bancorp and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and PSB Holdings 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 PSB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and PSB Holdings, you can compare the effects of market volatilities on Enterprise Bancorp and PSB Holdings 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 PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and PSB Holdings.
Diversification Opportunities for Enterprise Bancorp and PSB Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and PSB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and PSB Holdings go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and PSB Holdings
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 3.28 times more return on investment than PSB Holdings. However, Enterprise Bancorp is 3.28 times more volatile than PSB Holdings. It trades about 0.22 of its potential returns per unit of risk. PSB Holdings is currently generating about 0.36 per unit of risk. If you would invest 3,190 in Enterprise Bancorp on September 1, 2024 and sell it today you would earn a total of 509.00 from holding Enterprise Bancorp or generate 15.96% 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. PSB Holdings
Performance |
| Timeline |
| Enterprise Bancorp |
| PSB Holdings |
Enterprise Bancorp and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and PSB Holdings
The main advantage of trading using opposite Enterprise Bancorp and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, PSB Holdings 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 PSB Holdings will offset losses from the drop in PSB Holdings' 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 |
| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |