Correlation Between Enterprise Financial and City Holding
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and City Holding 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 City Holding 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 City Holding, you can compare the effects of market volatilities on Enterprise Financial and City Holding 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 City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and City Holding.
Diversification Opportunities for Enterprise Financial and City Holding
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and City is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and City Holding go up and down completely randomly.
Pair Corralation between Enterprise Financial and City Holding
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 1.28 times more return on investment than City Holding. However, Enterprise Financial is 1.28 times more volatile than City Holding. It trades about 0.12 of its potential returns per unit of risk. City Holding is currently generating about 0.08 per unit of risk. If you would invest 3,932 in Enterprise Financial Services on September 1, 2024 and sell it today you would earn a total of 2,127 from holding Enterprise Financial Services or generate 54.09% 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. City Holding
Performance |
| Timeline |
| Enterprise Financial |
| City Holding |
Enterprise Financial and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and City Holding
The main advantage of trading using opposite Enterprise Financial and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding'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 |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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