Correlation Between Enterprise Financial and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Bridgewater Bancshares 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 Bridgewater Bancshares 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 Bridgewater Bancshares, you can compare the effects of market volatilities on Enterprise Financial and Bridgewater Bancshares 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 Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Bridgewater Bancshares.
Diversification Opportunities for Enterprise Financial and Bridgewater Bancshares
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and Bridgewater is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares 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 Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between Enterprise Financial and Bridgewater Bancshares
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 1.01 times more return on investment than Bridgewater Bancshares. However, Enterprise Financial is 1.01 times more volatile than Bridgewater Bancshares. It trades about 0.08 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about 0.06 per unit of risk. If you would invest 4,090 in Enterprise Financial Services on September 4, 2024 and sell it today you would earn a total of 1,812 from holding Enterprise Financial Services or generate 44.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Financial Services vs. Bridgewater Bancshares
Performance |
| Timeline |
| Enterprise Financial |
| Bridgewater Bancshares |
Enterprise Financial and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and Bridgewater Bancshares
The main advantage of trading using opposite Enterprise Financial and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| Enterprise Financial vs. Home Federal Bancorp | Enterprise Financial vs. First Financial Northwest | Enterprise Financial vs. First Northwest Bancorp | Enterprise Financial vs. First Capital |
| Bridgewater Bancshares vs. International Bancshares | Bridgewater Bancshares vs. Finward Bancorp | Bridgewater Bancshares vs. Aquagold International | Bridgewater Bancshares vs. Thrivent High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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