Correlation Between Finward Bancorp and Enterprise Financial

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

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

Diversification Opportunities for Finward Bancorp and Enterprise Financial

-0.69

Correlation Coefficient

Finward Bancorp  Enterprise Financial

Excellent diversification

The 3 months correlation between Finward and Enterprise is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Financial and Finward 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 Finward Bancorp are associated (or correlated) with Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Enterprise Financial go up and down completely randomly.

Pair Corralation between Finward Bancorp and Enterprise Financial

Given the investment horizon of 90 days Finward Bancorp is expected to generate 0.51 times more return on investment than Enterprise Financial. However, Finward Bancorp is 1.96 times less risky than Enterprise Financial. It trades about 0.11 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about -0.1 per unit of risk. If you would invest  2,690  in Finward Bancorp on January 11, 2025 and sell it today you would earn a total of  201.00  from holding Finward Bancorp or generate 7.47% return on investment over 90 days.

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

Finward Bancorp  vs.  Enterprise Financial Services

Finward Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Finward Bancorp may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Enterprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enterprise Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Finward Bancorp and Enterprise Financial

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

The idea behind Finward Bancorp and Enterprise Financial Services 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.