Correlation Between Regions Financial and Enterprise Bancorp
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Enterprise Bancorp 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 Regions Financial and Enterprise Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Enterprise Bancorp, you can compare the effects of market volatilities on Regions Financial and Enterprise Bancorp 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 Regions Financial with a short position of Enterprise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Enterprise Bancorp.
Diversification Opportunities for Regions Financial and Enterprise Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and Enterprise is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp and Regions Financial 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 Regions Financial are associated (or correlated) with Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and Enterprise Bancorp go up and down completely randomly.
Pair Corralation between Regions Financial and Enterprise Bancorp
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.11 times less return on investment than Enterprise Bancorp. But when comparing it to its historical volatility, Regions Financial is 1.42 times less risky than Enterprise Bancorp. It trades about 0.17 of its potential returns per unit of risk. Enterprise Bancorp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,484 in Enterprise Bancorp on August 24, 2024 and sell it today you would earn a total of 1,159 from holding Enterprise Bancorp or generate 46.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Enterprise Bancorp
Performance |
| Timeline |
| Regions Financial |
| Enterprise Bancorp |
Regions Financial and Enterprise Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Enterprise Bancorp
The main advantage of trading using opposite Regions Financial and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Enterprise Bancorp 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 Bancorp will offset losses from the drop in Enterprise Bancorp's long position.| Regions Financial vs. Waterstone Financial | Regions Financial vs. Mid Penn Bancorp | Regions Financial vs. ST Bancorp | Regions Financial vs. Republic Bancorp |
| Enterprise Bancorp vs. Waterstone Financial | Enterprise Bancorp vs. Mid Penn Bancorp | Enterprise Bancorp vs. ST Bancorp | Enterprise Bancorp vs. Republic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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