Correlation Between ENB Financial and CreditRiskMonitor

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

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

Diversification Opportunities for ENB Financial and CreditRiskMonitor

0.39

Correlation Coefficient

ENB Financial  CreditRiskMonitor

Weak diversification

The 3 months correlation between ENB and CreditRiskMonitor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ENB Financial Corp and CreditRiskMonitorCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CreditRiskMonitorCom and ENB 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 ENB Financial Corp are associated (or correlated) with CreditRiskMonitor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CreditRiskMonitorCom has no effect on the direction of ENB Financial i.e., ENB Financial and CreditRiskMonitor go up and down completely randomly.

Pair Corralation between ENB Financial and CreditRiskMonitor

Given the investment horizon of 90 days ENB Financial Corp is expected to generate 0.65 times more return on investment than CreditRiskMonitor. However, ENB Financial Corp is 1.54 times less risky than CreditRiskMonitor. It trades about -0.13 of its potential returns per unit of risk. CreditRiskMonitorCom is currently generating about -0.12 per unit of risk. If you would invest  1,770  in ENB Financial Corp on October 27, 2024 and sell it today you would lose (70.00) from holding ENB Financial Corp or give up 3.95% of portfolio value over 90 days.

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

ENB Financial Corp  vs.  CreditRiskMonitorCom

ENB Financial Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENB Financial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, ENB Financial is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

CreditRiskMonitorCom

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CreditRiskMonitorCom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, CreditRiskMonitor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENB Financial and CreditRiskMonitor

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

The idea behind ENB Financial Corp and CreditRiskMonitorCom 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.