Correlation Between Freedom Bank and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and ENB 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 Freedom Bank and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and ENB Financial Corp, you can compare the effects of market volatilities on Freedom Bank and ENB 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 Freedom Bank with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and ENB Financial.
Diversification Opportunities for Freedom Bank and ENB Financial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freedom and ENB is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp and Freedom Bank 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 Freedom Bank of are associated (or correlated) with ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Freedom Bank i.e., Freedom Bank and ENB Financial go up and down completely randomly.
Pair Corralation between Freedom Bank and ENB Financial
Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.81 times more return on investment than ENB Financial. However, Freedom Bank of is 1.24 times less risky than ENB Financial. It trades about -0.04 of its potential returns per unit of risk. ENB Financial Corp is currently generating about -0.09 per unit of risk. If you would invest 1,061 in Freedom Bank of on October 20, 2024 and sell it today you would lose (12.00) from holding Freedom Bank of or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. ENB Financial Corp
Performance |
| Timeline |
| Freedom Bank |
| ENB Financial Corp |
Freedom Bank and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and ENB Financial
The main advantage of trading using opposite Freedom Bank and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, ENB 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 ENB Financial will offset losses from the drop in ENB Financial's long position.| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
| ENB Financial vs. Potomac Bancshares | ENB Financial vs. Apollo Bancorp | ENB Financial vs. The Farmers Bank | ENB Financial vs. 1ST SUMMIT 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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