Correlation Between Enterprise Financial and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Independent 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 Independent 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 Independent Bank, you can compare the effects of market volatilities on Enterprise Financial and Independent 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Independent Bank.
Diversification Opportunities for Enterprise Financial and Independent Bank
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enterprise and Independent is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Independent Bank go up and down completely randomly.
Pair Corralation between Enterprise Financial and Independent Bank
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 0.95 times more return on investment than Independent Bank. However, Enterprise Financial Services is 1.05 times less risky than Independent Bank. It trades about 0.09 of its potential returns per unit of risk. Independent Bank is currently generating about 0.06 per unit of risk. If you would invest 3,879 in Enterprise Financial Services on December 5, 2024 and sell it today you would earn a total of 2,038 from holding Enterprise Financial Services or generate 52.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Financial Services vs. Independent Bank
Performance |
| Timeline |
| Enterprise Financial |
| Independent Bank |
Enterprise Financial and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and Independent Bank
The main advantage of trading using opposite Enterprise Financial and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, Independent 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 Independent Bank will offset losses from the drop in Independent 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 |
| Independent Bank vs. Capitol Federal Financial | ||
| Independent Bank vs. BankFinancial | ||
| Independent Bank vs. Business First Bancshares | ||
| Independent Bank vs. First 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |