Correlation Between ENB Financial and FNB
Can any of the company-specific risk be diversified away by investing in both ENB Financial and FNB 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 ENB Financial and FNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENB Financial Corp and FNB Inc, you can compare the effects of market volatilities on ENB Financial and FNB 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 ENB Financial with a short position of FNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENB Financial and FNB.
Diversification Opportunities for ENB Financial and FNB
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENB and FNB is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ENB Financial Corp and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and ENB 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 ENB Financial Corp are associated (or correlated) with FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of ENB Financial i.e., ENB Financial and FNB go up and down completely randomly.
Pair Corralation between ENB Financial and FNB
Given the investment horizon of 90 days ENB Financial is expected to generate 1.96 times less return on investment than FNB. But when comparing it to its historical volatility, ENB Financial Corp is 1.51 times less risky than FNB. It trades about 0.02 of its potential returns per unit of risk. FNB Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,500 in FNB Inc on August 29, 2024 and sell it today you would earn a total of 0.00 from holding FNB Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.57% |
| Values | Daily Returns |
ENB Financial Corp vs. FNB Inc
Performance |
| Timeline |
| ENB Financial Corp |
| FNB Inc |
ENB Financial and FNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENB Financial and FNB
The main advantage of trading using opposite ENB Financial and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENB Financial position performs unexpectedly, FNB 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 FNB will offset losses from the drop in FNB's long position.| ENB Financial vs. Potomac Bancshares | ENB Financial vs. Apollo Bancorp | ENB Financial vs. The Farmers Bank | ENB Financial vs. 1ST SUMMIT BANCORP |
| FNB vs. Century Financial Corp | FNB vs. Apollo Bancorp | FNB vs. Commercial National Financial | FNB vs. Eastern Michigan Financial |
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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