Correlation Between First Bancshares, and Enterprise Financial
Can any of the company-specific risk be diversified away by investing in both First Bancshares, and Enterprise Financial 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 First Bancshares, and Enterprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The First Bancshares, and Enterprise Financial Services, you can compare the effects of market volatilities on First Bancshares, and Enterprise Financial 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 First Bancshares, with a short position of Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares, and Enterprise Financial.
Diversification Opportunities for First Bancshares, and Enterprise Financial
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Enterprise is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Financial and First Bancshares, 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 The First Bancshares, are associated (or correlated) with Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of First Bancshares, i.e., First Bancshares, and Enterprise Financial go up and down completely randomly.
Pair Corralation between First Bancshares, and Enterprise Financial
Given the investment horizon of 90 days First Bancshares, is expected to generate 1.03 times less return on investment than Enterprise Financial. But when comparing it to its historical volatility, The First Bancshares, is 1.11 times less risky than Enterprise Financial. It trades about 0.19 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,310 in Enterprise Financial Services on August 25, 2024 and sell it today you would earn a total of 764.00 from holding Enterprise Financial Services or generate 14.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The First Bancshares, vs. Enterprise Financial Services
Performance |
| Timeline |
| First Bancshares, |
| Enterprise Financial |
First Bancshares, and Enterprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares, and Enterprise Financial
The main advantage of trading using opposite First Bancshares, and Enterprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares, position performs unexpectedly, Enterprise Financial 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 Enterprise Financial will offset losses from the drop in Enterprise Financial's long position.| First Bancshares, vs. KeyCorp | First Bancshares, vs. Fifth Third Bancorp | First Bancshares, vs. Zions Bancorporation | First Bancshares, vs. Huntington Bancshares Incorporated |
| Enterprise Financial vs. Home Federal Bancorp | Enterprise Financial vs. First Financial Northwest | Enterprise Financial vs. First Northwest Bancorp | Enterprise Financial vs. First Capital |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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