Correlation Between First Reliance and ENB Financial
Can any of the company-specific risk be diversified away by investing in both First Reliance 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 First Reliance and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Reliance Bancshares and ENB Financial Corp, you can compare the effects of market volatilities on First Reliance 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 First Reliance with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Reliance and ENB Financial.
Diversification Opportunities for First Reliance and ENB Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and ENB is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Reliance Bancshares 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 First Reliance 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 Reliance Bancshares 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 First Reliance i.e., First Reliance and ENB Financial go up and down completely randomly.
Pair Corralation between First Reliance and ENB Financial
Given the investment horizon of 90 days First Reliance is expected to generate 1.43 times less return on investment than ENB Financial. But when comparing it to its historical volatility, First Reliance Bancshares is 2.69 times less risky than ENB Financial. It trades about 0.16 of its potential returns per unit of risk. ENB Financial Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,428 in ENB Financial Corp on August 29, 2024 and sell it today you would earn a total of 397.00 from holding ENB Financial Corp or generate 27.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Reliance Bancshares vs. ENB Financial Corp
Performance |
| Timeline |
| First Reliance Bancshares |
| ENB Financial Corp |
First Reliance and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Reliance and ENB Financial
The main advantage of trading using opposite First Reliance and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Reliance 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.| First Reliance vs. Israel Discount Bank | First Reliance vs. Baraboo Bancorporation | First Reliance vs. Danske Bank AS | First Reliance vs. Jyske Bank AS |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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