Correlation Between ENB Financial and AllianzGI Convertible

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

Diversification Opportunities for ENB Financial and AllianzGI Convertible

0.41

Correlation Coefficient

ENB Financial  AllianzGI Convertible

Very weak diversification

The 3 months correlation between ENB and AllianzGI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ENB Financial Corp and AllianzGI Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzGI Convertible 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 AllianzGI Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzGI Convertible has no effect on the direction of ENB Financial i.e., ENB Financial and AllianzGI Convertible go up and down completely randomly.

Pair Corralation between ENB Financial and AllianzGI Convertible

Given the investment horizon of 90 days ENB Financial Corp is expected to generate 7.27 times more return on investment than AllianzGI Convertible. However, ENB Financial is 7.27 times more volatile than AllianzGI Convertible Income. It trades about 0.18 of its potential returns per unit of risk. AllianzGI Convertible Income is currently generating about 0.29 per unit of risk. If you would invest  1,421  in ENB Financial Corp on February 15, 2024 and sell it today you would earn a total of  99.00  from holding ENB Financial Corp or generate 6.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

ENB Financial Corp  vs.  AllianzGI Convertible Income

ENB Financial Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ENB Financial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, ENB Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AllianzGI Convertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianzGI Convertible Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, AllianzGI Convertible is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ENB Financial and AllianzGI Convertible

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

The idea behind ENB Financial Corp and AllianzGI Convertible Income 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.