Correlation Between CVCY Old and Enterprise Bancorp

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

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

Diversification Opportunities for CVCY Old and Enterprise Bancorp

0.0

Correlation Coefficient

CVCY Old  Enterprise Bancorp

Pay attention - limited upside

The 3 months correlation between CVCY and Enterprise is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVCY Old and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp and CVCY Old 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 CVCY Old 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 CVCY Old i.e., CVCY Old and Enterprise Bancorp go up and down completely randomly.

Pair Corralation between CVCY Old and Enterprise Bancorp

If you would invest (100.00) in CVCY Old on December 30, 2024 and sell it today you would earn a total of  100.00  from holding CVCY Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CVCY Old  vs.  Enterprise Bancorp

CVCY Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVCY Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, CVCY Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Enterprise Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enterprise Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Enterprise Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CVCY Old and Enterprise Bancorp

The main advantage of trading using opposite CVCY Old and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVCY Old 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.

The idea behind CVCY Old and Enterprise Bancorp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.