Correlation Between Esquire Financial and Third Coast
Can any of the company-specific risk be diversified away by investing in both Esquire Financial and Third Coast 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 Esquire Financial and Third Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esquire Financial Holdings and Third Coast Bancshares, you can compare the effects of market volatilities on Esquire Financial and Third Coast 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 Esquire Financial with a short position of Third Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and Third Coast.
Diversification Opportunities for Esquire Financial and Third Coast
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Esquire and Third is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and Third Coast Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Coast Bancshares and Esquire 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 Esquire Financial Holdings are associated (or correlated) with Third Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Coast Bancshares has no effect on the direction of Esquire Financial i.e., Esquire Financial and Third Coast go up and down completely randomly.
Pair Corralation between Esquire Financial and Third Coast
Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 0.94 times more return on investment than Third Coast. However, Esquire Financial Holdings is 1.06 times less risky than Third Coast. It trades about 0.19 of its potential returns per unit of risk. Third Coast Bancshares is currently generating about 0.17 per unit of risk. If you would invest 6,002 in Esquire Financial Holdings on November 2, 2024 and sell it today you would earn a total of 2,740 from holding Esquire Financial Holdings or generate 45.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esquire Financial Holdings vs. Third Coast Bancshares
Performance |
| Timeline |
| Esquire Financial |
| Third Coast Bancshares |
Esquire Financial and Third Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esquire Financial and Third Coast
The main advantage of trading using opposite Esquire Financial and Third Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, Third Coast 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 Third Coast will offset losses from the drop in Third Coast's long position.| Esquire Financial vs. Home Federal Bancorp | Esquire Financial vs. First Financial Northwest | Esquire Financial vs. First Northwest Bancorp | Esquire Financial vs. First Capital |
| Third Coast vs. Byline Bancorp | Third Coast vs. Coastal Financial Corp | Third Coast vs. NBT Bancorp | Third Coast vs. Community West Bancshares |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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