Correlation Between Enterprise Financial and Brookline Bancorp
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Brookline Bancorp 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 Financial and Brookline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Financial Services and Brookline Bancorp, you can compare the effects of market volatilities on Enterprise Financial and Brookline Bancorp 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 Financial with a short position of Brookline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Brookline Bancorp.
Diversification Opportunities for Enterprise Financial and Brookline Bancorp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and Brookline is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp and Enterprise Financial 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 Financial Services are associated (or correlated) with Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Brookline Bancorp go up and down completely randomly.
Pair Corralation between Enterprise Financial and Brookline Bancorp
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 1.21 times more return on investment than Brookline Bancorp. However, Enterprise Financial is 1.21 times more volatile than Brookline Bancorp. It trades about 0.19 of its potential returns per unit of risk. Brookline Bancorp is currently generating about 0.23 per unit of risk. If you would invest 5,332 in Enterprise Financial Services on August 29, 2024 and sell it today you would earn a total of 773.00 from holding Enterprise Financial Services or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Financial Services vs. Brookline Bancorp
Performance |
| Timeline |
| Enterprise Financial |
| Brookline Bancorp |
Enterprise Financial and Brookline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and Brookline Bancorp
The main advantage of trading using opposite Enterprise Financial and Brookline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, Brookline Bancorp 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 Brookline Bancorp will offset losses from the drop in Brookline Bancorp's long position.| Enterprise Financial vs. Fifth Third Bancorp | Enterprise Financial vs. Huntington Bancshares Incorporated | Enterprise Financial vs. MT Bank |
| Brookline Bancorp vs. Heritage Commerce Corp | Brookline Bancorp vs. Eastern Bankshares | Brookline Bancorp vs. HarborOne Bancorp | Brookline Bancorp vs. Kearny 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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