Correlation Between Enterprise Financial and First Capital
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and First Capital 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 First Capital 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 First Capital, you can compare the effects of market volatilities on Enterprise Financial and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and First Capital.
Diversification Opportunities for Enterprise Financial and First Capital
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enterprise and First is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and First Capital go up and down completely randomly.
Pair Corralation between Enterprise Financial and First Capital
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 0.95 times more return on investment than First Capital. However, Enterprise Financial Services is 1.05 times less risky than First Capital. It trades about 0.07 of its potential returns per unit of risk. First Capital is currently generating about 0.04 per unit of risk. If you would invest 4,307 in Enterprise Financial Services on September 12, 2024 and sell it today you would earn a total of 1,662 from holding Enterprise Financial Services or generate 38.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
Enterprise Financial Services vs. First Capital
Performance |
| Timeline |
| Enterprise Financial |
| First Capital |
Enterprise Financial and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and First Capital
The main advantage of trading using opposite Enterprise Financial and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital'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 |
| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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