Correlation Between Enterprise Financial and Ponce Financial

Can any of the company-specific risk be diversified away by investing in both Enterprise Financial and Ponce 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 Enterprise Financial and Ponce Financial 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 Ponce Financial Group, you can compare the effects of market volatilities on Enterprise Financial and Ponce 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 Enterprise Financial with a short position of Ponce Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Financial and Ponce Financial.

Diversification Opportunities for Enterprise Financial and Ponce Financial

0.9

Correlation Coefficient

Enterprise Financial  Ponce Financial

Almost no diversification

The 3 months correlation between Enterprise and Ponce is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Ponce Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ponce Financial Group 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 Ponce Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ponce Financial Group has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Ponce Financial go up and down completely randomly.

Pair Corralation between Enterprise Financial and Ponce Financial

Given the investment horizon of 90 days Enterprise Financial Services is expected to under-perform the Ponce Financial. But the stock apears to be less risky and, when comparing its historical volatility, Enterprise Financial Services is 1.06 times less risky than Ponce Financial. The stock trades about -0.21 of its potential returns per unit of risk. The Ponce Financial Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,318  in Ponce Financial Group on October 11, 2024 and sell it today you would lose (16.00) from holding Ponce Financial Group or give up 1.21% of portfolio value over 90 days.

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

Enterprise Financial Services  vs.  Ponce Financial Group

Enterprise Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Enterprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ponce Financial Group

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ponce Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Ponce Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enterprise Financial and Ponce Financial

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

The idea behind Enterprise Financial Services and Ponce Financial Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.