Correlation Between Enterprise Financial and Old Second
Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Old Second 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 Old Second 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 Old Second Bancorp, you can compare the effects of market volatilities on Enterprise Financial and Old Second 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 Old Second. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Old Second.
Diversification Opportunities for Enterprise Financial and Old Second
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enterprise and Old is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Old Second Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Second 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 Old Second. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Second Bancorp has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Old Second go up and down completely randomly.
Pair Corralation between Enterprise Financial and Old Second
Given the investment horizon of 90 days Enterprise Financial Services is expected to generate 1.34 times more return on investment than Old Second. However, Enterprise Financial is 1.34 times more volatile than Old Second Bancorp. It trades about 0.19 of its potential returns per unit of risk. Old Second Bancorp is currently generating about 0.2 per unit of risk. If you would invest 5,332 in Enterprise Financial Services on August 29, 2024 and sell it today you would earn a total of 812.00 from holding Enterprise Financial Services or generate 15.23% 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. Old Second Bancorp
Performance |
| Timeline |
| Enterprise Financial |
| Old Second Bancorp |
Enterprise Financial and Old Second Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Financial and Old Second
The main advantage of trading using opposite Enterprise Financial and Old Second positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Financial position performs unexpectedly, Old Second 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 Old Second will offset losses from the drop in Old Second'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 |
| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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