Correlation Between Meritage Hospitality and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Meritage Hospitality 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 Meritage Hospitality and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meritage Hospitality Group and ENB Financial Corp, you can compare the effects of market volatilities on Meritage Hospitality 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 Meritage Hospitality with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meritage Hospitality and ENB Financial.
Diversification Opportunities for Meritage Hospitality and ENB Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meritage and ENB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Meritage Hospitality Group 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 Meritage Hospitality 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 Meritage Hospitality Group 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 Meritage Hospitality i.e., Meritage Hospitality and ENB Financial go up and down completely randomly.
Pair Corralation between Meritage Hospitality and ENB Financial
Given the investment horizon of 90 days Meritage Hospitality Group is expected to under-perform the ENB Financial. But the otc stock apears to be less risky and, when comparing its historical volatility, Meritage Hospitality Group is 1.79 times less risky than ENB Financial. The otc stock trades about -0.3 of its potential returns per unit of risk. The ENB Financial Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,435 in ENB Financial Corp on August 28, 2024 and sell it today you would earn a total of 390.00 from holding ENB Financial Corp or generate 27.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.73% |
| Values | Daily Returns |
Meritage Hospitality Group vs. ENB Financial Corp
Performance |
| Timeline |
| Meritage Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ENB Financial Corp |
Meritage Hospitality and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meritage Hospitality and ENB Financial
The main advantage of trading using opposite Meritage Hospitality and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meritage Hospitality 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.| Meritage Hospitality vs. Ieh Corp | Meritage Hospitality vs. Noble Romans | Meritage Hospitality vs. Flanigans Enterprises |
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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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