Correlation Between Enterprise Financial and John Marshall
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and John Marshall 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 John Marshall 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 John Marshall Bancorp, you can compare the effects of market volatilities on Enterprise Financial and John Marshall 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 John Marshall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and John Marshall.
Diversification Opportunities for Enterprise Financial and John Marshall
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enterprise and John is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and John Marshall Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Marshall Bancorp 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 John Marshall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Marshall Bancorp has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and John Marshall go up and down completely randomly.
Pair Corralation between Enterprise Financial and John Marshall
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 0.8 times more return on investment than John Marshall. However, Enterprise Financial Services is 1.25 times less risky than John Marshall. It trades about 0.12 of its potential returns per unit of risk. John Marshall Bancorp is currently generating about 0.07 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Financial Services vs. John Marshall Bancorp
Performance |
| Timeline |
| Enterprise Financial |
| John Marshall Bancorp |
Enterprise Financial and John Marshall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and John Marshall
The main advantage of trading using opposite Enterprise Financial and John Marshall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, John Marshall 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 John Marshall will offset losses from the drop in John Marshall'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 |
| John Marshall vs. Home Federal Bancorp | John Marshall vs. Magyar Bancorp | John Marshall vs. ChoiceOne Financial Services | John Marshall vs. Affinity 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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