Correlation Between Home BancShares and ENB Financial
Can any of the company-specific risk be diversified away by investing in both Home BancShares 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 Home BancShares and ENB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home BancShares and ENB Financial Corp, you can compare the effects of market volatilities on Home BancShares 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 Home BancShares with a short position of ENB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home BancShares and ENB Financial.
Diversification Opportunities for Home BancShares and ENB Financial
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and ENB is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Home 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 Home BancShares 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 Home 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 Home BancShares i.e., Home BancShares and ENB Financial go up and down completely randomly.
Pair Corralation between Home BancShares and ENB Financial
Given the investment horizon of 90 days Home BancShares is expected to generate 1.31 times less return on investment than ENB Financial. In addition to that, Home BancShares is 1.07 times more volatile than ENB Financial Corp. It trades about 0.03 of its total potential returns per unit of risk. ENB Financial Corp is currently generating about 0.04 per unit of volatility. If you would invest 1,441 in ENB Financial Corp on January 19, 2024 and sell it today you would earn a total of 19.00 from holding ENB Financial Corp or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home BancShares vs. ENB Financial Corp
Performance |
| Timeline |
| Home BancShares |
| ENB Financial Corp |
Home BancShares and ENB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home BancShares and ENB Financial
The main advantage of trading using opposite Home BancShares and ENB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home BancShares 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.| Home BancShares vs. Community West Bancshares | Home BancShares vs. First Financial Northwest | Home BancShares vs. First Northwest Bancorp | Home BancShares vs. First Capital |
| ENB Financial vs. Pfizer Inc | ENB Financial vs. Heartland Financial USA | ENB Financial vs. Conflux Network | ENB Financial vs. Citigroup Capital XIII |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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