Correlation Between Enterprise Bancorp and Washington Federal
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp and Washington Federal 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 Washington Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Washington Federal, you can compare the effects of market volatilities on Enterprise Bancorp and Washington Federal 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 Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Washington Federal.
Diversification Opportunities for Enterprise Bancorp and Washington Federal
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enterprise and Washington is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal 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 Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Enterprise Bancorp i.e., Enterprise Bancorp and Washington Federal go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Washington Federal
Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 1.37 times more return on investment than Washington Federal. However, Enterprise Bancorp is 1.37 times more volatile than Washington Federal. It trades about 0.25 of its potential returns per unit of risk. Washington Federal is currently generating about -0.12 per unit of risk. If you would invest 3,876 in Enterprise Bancorp on November 5, 2024 and sell it today you would earn a total of 357.00 from holding Enterprise Bancorp or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Enterprise Bancorp vs. Washington Federal
Performance |
| Timeline |
| Enterprise Bancorp |
| Washington Federal |
Enterprise Bancorp and Washington Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Washington Federal
The main advantage of trading using opposite Enterprise Bancorp and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp position performs unexpectedly, Washington Federal 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 Washington Federal will offset losses from the drop in Washington Federal's long position.| Enterprise Bancorp vs. US Bancorp | Enterprise Bancorp vs. Truist Financial Corp | Enterprise Bancorp vs. KeyCorp | Enterprise Bancorp vs. Citizens Financial Group, |
| Washington Federal vs. Fifth Third Bancorp | Washington Federal vs. Huntington Bancshares Incorporated | Washington Federal vs. Fifth Third Bancorp | Washington Federal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |