Correlation Between Enterprise Financial and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Cadence Bank 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 Cadence Bank 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 Cadence Bank, you can compare the effects of market volatilities on Enterprise Financial and Cadence Bank 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 Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Cadence Bank.
Diversification Opportunities for Enterprise Financial and Cadence Bank
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enterprise and Cadence is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Cadence Bank go up and down completely randomly.
Pair Corralation between Enterprise Financial and Cadence Bank
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 3.43 times more return on investment than Cadence Bank. However, Enterprise Financial is 3.43 times more volatile than Cadence Bank. It trades about 0.2 of its potential returns per unit of risk. Cadence Bank is currently generating about -0.17 per unit of risk. If you would invest 5,272 in Enterprise Financial Services on September 1, 2024 and sell it today you would earn a total of 787.00 from holding Enterprise Financial Services or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Enterprise Financial Services vs. Cadence Bank
Performance |
| Timeline |
| Enterprise Financial |
| Cadence Bank |
Enterprise Financial and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and Cadence Bank
The main advantage of trading using opposite Enterprise Financial and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, Cadence Bank 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 Cadence Bank will offset losses from the drop in Cadence Bank's 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 |
| Cadence Bank vs. Bank of Hawaii | Cadence Bank vs. Associated Banc Corp | Cadence Bank vs. Citizens Financial Group | Cadence Bank vs. CullenFrost Bankers |
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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