Correlation Between ENB Financial and F M

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

Diversification Opportunities for ENB Financial and F M

-0.29

Correlation Coefficient

ENB Financial  F M

Very good diversification

The 3 months correlation between ENB and FMBM is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ENB Financial Corp and F M Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F M Bank 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 F M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F M Bank has no effect on the direction of ENB Financial i.e., ENB Financial and F M go up and down completely randomly.

Pair Corralation between ENB Financial and F M

Given the investment horizon of 90 days ENB Financial Corp is expected to under-perform the F M. In addition to that, ENB Financial is 1.63 times more volatile than F M Bank. It trades about -0.08 of its total potential returns per unit of risk. F M Bank is currently generating about 0.03 per unit of volatility. If you would invest  1,952  in F M Bank on October 12, 2024 and sell it today you would earn a total of  8.00  from holding F M Bank or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ENB Financial Corp  vs.  F M Bank

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.

F M Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days F M Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ENB Financial and F M

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

The idea behind ENB Financial Corp and F M Bank 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.