Correlation Between Enterprise Financial and Citizens Holding

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

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

Diversification Opportunities for Enterprise Financial and Citizens Holding

-0.66

Correlation Coefficient

Enterprise Financial  Citizens Holding

Excellent diversification

The 3 months correlation between Enterprise and Citizens is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding and Enterprise 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 Enterprise Financial Services are associated (or correlated) with Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Citizens Holding go up and down completely randomly.

Pair Corralation between Enterprise Financial and Citizens Holding

If you would invest  1,195  in Citizens Holding on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Citizens Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Enterprise Financial Services  vs.  Citizens Holding

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.

Citizens Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Citizens Holding is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enterprise Financial and Citizens Holding

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

The idea behind Enterprise Financial Services and Citizens Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.