Correlation Between Enterprise Financial and Affinity Bancshares

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

Diversification Opportunities for Enterprise Financial and Affinity Bancshares

0.32

Correlation Coefficient

Enterprise Financial  Affinity Bancshares

Weak diversification

The 3 months correlation between Enterprise and Affinity is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Financial Services and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares 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 Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Enterprise Financial i.e., Enterprise Financial and Affinity Bancshares go up and down completely randomly.

Pair Corralation between Enterprise Financial and Affinity Bancshares

Assuming the 90 days horizon Enterprise Financial Services is expected to generate 0.67 times more return on investment than Affinity Bancshares. However, Enterprise Financial Services is 1.49 times less risky than Affinity Bancshares. It trades about 0.05 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.03 per unit of risk. If you would invest  1,636  in Enterprise Financial Services on October 7, 2024 and sell it today you would earn a total of  279.00  from holding Enterprise Financial Services or generate 17.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Enterprise Financial Services  vs.  Affinity Bancshares

Enterprise Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enterprise Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 weak 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.

Pair Trading with Enterprise Financial and Affinity Bancshares

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

The idea behind Enterprise Financial Services and Affinity Bancshares 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.