Correlation Between Logan Ridge and ENB Financial

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

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

Diversification Opportunities for Logan Ridge and ENB Financial

0.54

Correlation Coefficient

Logan Ridge  ENB Financial

Very weak diversification

The 3 months correlation between Logan and ENB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and ENB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENB Financial Corp and Logan Ridge 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 Logan Ridge Finance are associated (or correlated) with ENB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENB Financial Corp has no effect on the direction of Logan Ridge i.e., Logan Ridge and ENB Financial go up and down completely randomly.

Pair Corralation between Logan Ridge and ENB Financial

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the ENB Financial. In addition to that, Logan Ridge is 1.24 times more volatile than ENB Financial Corp. It trades about -0.12 of its total potential returns per unit of risk. ENB Financial Corp is currently generating about -0.12 per unit of volatility. If you would invest  1,751  in ENB Financial Corp on December 26, 2024 and sell it today you would lose (156.00) from holding ENB Financial Corp or give up 8.91% of portfolio value over 90 days.

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

Logan Ridge Finance  vs.  ENB Financial Corp

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ENB Financial Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Logan Ridge and ENB Financial

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

The idea behind Logan Ridge Finance and ENB Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..