Correlation Between ACNB and ENB Financial
Can any of the company-specific risk be diversified away by investing in both ACNB 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 ACNB and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACNB Corporation and ENB Financial Corp, you can compare the effects of market volatilities on ACNB 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 ACNB with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACNB and ENB Financial.
Diversification Opportunities for ACNB and ENB Financial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ACNB and ENB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ACNB Corp. 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 ACNB 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 ACNB Corporation 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 ACNB i.e., ACNB and ENB Financial go up and down completely randomly.
Pair Corralation between ACNB and ENB Financial
Given the investment horizon of 90 days ACNB Corporation is expected to under-perform the ENB Financial. In addition to that, ACNB is 1.46 times more volatile than ENB Financial Corp. It trades about -0.12 of its total potential returns per unit of risk. ENB Financial Corp is currently generating about 0.0 per unit of volatility. If you would invest 1,444 in ENB Financial Corp on January 17, 2024 and sell it today you would lose (7.00) from holding ENB Financial Corp or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACNB Corp. vs. ENB Financial Corp
Performance |
| Timeline |
| ACNB |
| ENB Financial Corp |
ACNB and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACNB and ENB Financial
The main advantage of trading using opposite ACNB and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACNB 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.The idea behind ACNB Corporation and ENB Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ENB Financial vs. Putnam Short Duration | ENB Financial vs. Royce Opportunity Fund | ENB Financial vs. C4 TherapeuticsInc | ENB Financial vs. LSI Industries |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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