Correlation Between First Commonwealth and Enterprise Financial
Can any of the company-specific risk be diversified away by investing in both First Commonwealth 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 Commonwealth and Enterprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Commonwealth Financial and Enterprise Financial Services, you can compare the effects of market volatilities on First Commonwealth 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 Commonwealth with a short position of Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commonwealth and Enterprise Financial.
Diversification Opportunities for First Commonwealth and Enterprise Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Enterprise is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial 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 Commonwealth 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 First Commonwealth Financial 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 Commonwealth i.e., First Commonwealth and Enterprise Financial go up and down completely randomly.
Pair Corralation between First Commonwealth and Enterprise Financial
Considering the 90-day investment horizon First Commonwealth Financial is expected to generate 0.98 times more return on investment than Enterprise Financial. However, First Commonwealth Financial is 1.02 times less risky than Enterprise Financial. It trades about 0.08 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.07 per unit of risk. If you would invest 1,131 in First Commonwealth Financial on August 29, 2024 and sell it today you would earn a total of 782.00 from holding First Commonwealth Financial or generate 69.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Commonwealth Financial vs. Enterprise Financial Services
Performance |
| Timeline |
| First Commonwealth |
| Enterprise Financial |
First Commonwealth and Enterprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Commonwealth and Enterprise Financial
The main advantage of trading using opposite First Commonwealth and Enterprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commonwealth 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 Commonwealth vs. Fifth Third Bancorp | First Commonwealth vs. Huntington Bancshares Incorporated | First Commonwealth vs. MT Bank |
| Enterprise Financial vs. Fifth Third Bancorp | Enterprise Financial vs. Huntington Bancshares Incorporated | Enterprise Financial vs. MT Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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