Correlation Between ENB Financial and Uwharrie Capital

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

Diversification Opportunities for ENB Financial and Uwharrie Capital

0.49

Correlation Coefficient

ENB Financial  Uwharrie Capital

Very weak diversification

The 3 months correlation between ENB and Uwharrie is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ENB Financial Corp and Uwharrie Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uwharrie Capital Corp 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 Uwharrie Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uwharrie Capital Corp has no effect on the direction of ENB Financial i.e., ENB Financial and Uwharrie Capital go up and down completely randomly.

Pair Corralation between ENB Financial and Uwharrie Capital

Given the investment horizon of 90 days ENB Financial Corp is expected to generate 2.55 times more return on investment than Uwharrie Capital. However, ENB Financial is 2.55 times more volatile than Uwharrie Capital Corp. It trades about 0.09 of its potential returns per unit of risk. Uwharrie Capital Corp is currently generating about 0.1 per unit of risk. If you would invest  1,428  in ENB Financial Corp on September 1, 2024 and sell it today you would earn a total of  397.00  from holding ENB Financial Corp or generate 27.8% return on investment over 90 days.

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

ENB Financial Corp  vs.  Uwharrie Capital Corp

ENB Financial Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENB Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, ENB Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Uwharrie Capital Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uwharrie Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Uwharrie Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ENB Financial and Uwharrie Capital

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

The idea behind ENB Financial Corp and Uwharrie Capital Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.