Correlation Between Enterprise Bancorp and First Capital

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

By analyzing existing cross correlation between Enterprise Bancorp and First Capital, you can compare the effects of market volatilities on Enterprise Bancorp and First 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 Enterprise Bancorp with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and First Capital.

Diversification Opportunities for Enterprise Bancorp and First Capital

-0.49

Correlation Coefficient

Enterprise Bancorp  First Capital

Very good diversification

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

Pair Corralation between Enterprise Bancorp and First Capital

Given the investment horizon of 90 days Enterprise Bancorp is expected to generate 0.52 times more return on investment than First Capital. However, Enterprise Bancorp is 1.93 times less risky than First Capital. It trades about 0.18 of its potential returns per unit of risk. First Capital is currently generating about 0.0 per unit of risk. If you would invest  3,432  in Enterprise Bancorp on April 21, 2025 and sell it today you would earn a total of  532.00  from holding Enterprise Bancorp or generate 15.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Enterprise Bancorp  vs.  First Capital

Enterprise Bancorp

Risk-Adjusted Performance

Good

Over the last 90 days Enterprise Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Enterprise Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Enterprise Bancorp and First Capital

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

The idea behind Enterprise Bancorp and First Capital 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..