Correlation Between Enterprise Financial and National Bank
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and National 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 National 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 National Bank Holdings, you can compare the effects of market volatilities on Enterprise Financial and National 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and National Bank.
Diversification Opportunities for Enterprise Financial and National Bank
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and National is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and National Bank go up and down completely randomly.
Pair Corralation between Enterprise Financial and National Bank
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 1.06 times more return on investment than National Bank. However, Enterprise Financial is 1.06 times more volatile than National Bank Holdings. It trades about 0.19 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.09 per unit of risk. If you would invest 5,293 in Enterprise Financial Services on August 30, 2024 and sell it today you would earn a total of 791.00 from holding Enterprise Financial Services or generate 14.94% 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. National Bank Holdings
Performance |
| Timeline |
| Enterprise Financial |
| National Bank Holdings |
Enterprise Financial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and National Bank
The main advantage of trading using opposite Enterprise Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, National 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 National Bank will offset losses from the drop in National 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 |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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