Correlation Between Enterprise Bancorp and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and Tectonic Financial 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 Tectonic Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Tectonic Financial PR, you can compare the effects of market volatilities on Enterprise Bancorp and Tectonic Financial 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Tectonic Financial.
Diversification Opportunities for Enterprise Bancorp and Tectonic Financial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and Tectonic is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and Tectonic Financial go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Tectonic Financial
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 1.23 times more return on investment than Tectonic Financial. However, Enterprise Bancorp is 1.23 times more volatile than Tectonic Financial PR. It trades about 0.15 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.04 per unit of risk. If you would invest 4,121 in Enterprise Bancorp on November 18, 2024 and sell it today you would earn a total of 184.00 from holding Enterprise Bancorp or generate 4.46% 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. Tectonic Financial PR
Performance |
| Timeline |
| Enterprise Bancorp |
| Tectonic Financial |
Enterprise Bancorp and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Tectonic Financial
The main advantage of trading using opposite Enterprise Bancorp and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, Tectonic Financial 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 Tectonic Financial will offset losses from the drop in Tectonic Financial'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 |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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