Correlation Between Citizens Financial and Esquire Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Esquire 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 Citizens Financial and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Esquire Financial Holdings, you can compare the effects of market volatilities on Citizens Financial and Esquire 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 Citizens Financial with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Esquire Financial.
Diversification Opportunities for Citizens Financial and Esquire Financial
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citizens and Esquire is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Citizens 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 Citizens Financial Group are associated (or correlated) with Esquire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esquire Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Esquire Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and Esquire Financial
Assuming the 90 days trading horizon Citizens Financial is expected to generate 7.49 times less return on investment than Esquire Financial. But when comparing it to its historical volatility, Citizens Financial Group is 1.1 times less risky than Esquire Financial. It trades about 0.01 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,373 in Esquire Financial Holdings on October 20, 2024 and sell it today you would earn a total of 4,311 from holding Esquire Financial Holdings or generate 98.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Esquire Financial Holdings
Performance |
| Timeline |
| Citizens Financial |
| Esquire Financial |
Citizens Financial and Esquire Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Esquire Financial
The main advantage of trading using opposite Citizens Financial and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Esquire 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 Esquire Financial will offset losses from the drop in Esquire Financial's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
| Esquire Financial vs. Home Federal Bancorp | Esquire Financial vs. First Financial Northwest | Esquire Financial vs. First Northwest Bancorp | Esquire Financial vs. First Capital |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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