Correlation Between Affinity Bancshares and Enterprise Financial

Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Enterprise 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 Affinity Bancshares and Enterprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Affinity Bancshares and Enterprise Financial Services, you can compare the effects of market volatilities on Affinity Bancshares and Enterprise 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 Affinity Bancshares with a short position of Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Enterprise Financial.

Diversification Opportunities for Affinity Bancshares and Enterprise Financial

0.12

Correlation Coefficient

Affinity Bancshares  Enterprise Financial

Average diversification

The 3 months correlation between Affinity and Enterprise is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Financial and Affinity 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 Affinity Bancshares are associated (or correlated) with Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Enterprise Financial go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Enterprise Financial

Given the investment horizon of 90 days Affinity Bancshares is expected to under-perform the Enterprise Financial. In addition to that, Affinity Bancshares is 1.15 times more volatile than Enterprise Financial Services. It trades about -0.15 of its total potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.06 per unit of volatility. If you would invest  5,316  in Enterprise Financial Services on October 6, 2024 and sell it today you would earn a total of  273.00  from holding Enterprise Financial Services or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Affinity Bancshares  vs.  Enterprise Financial Services

Affinity Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Enterprise Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Financial Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Enterprise Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affinity Bancshares and Enterprise Financial

The main advantage of trading using opposite Affinity Bancshares and Enterprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Enterprise 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 Enterprise Financial will offset losses from the drop in Enterprise Financial's long position.

The idea behind Affinity Bancshares and Enterprise Financial Services 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.