Correlation Between US Century and Esquire Financial
Can any of the company-specific risk be diversified away by investing in both US Century 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 US Century and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Century Bank and Esquire Financial Holdings, you can compare the effects of market volatilities on US Century 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 US Century with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Century and Esquire Financial.
Diversification Opportunities for US Century and Esquire Financial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USCB and Esquire is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding US Century Bank and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and US Century 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 US Century Bank 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 US Century i.e., US Century and Esquire Financial go up and down completely randomly.
Pair Corralation between US Century and Esquire Financial
Given the investment horizon of 90 days US Century is expected to generate 1.17 times less return on investment than Esquire Financial. In addition to that, US Century is 1.42 times more volatile than Esquire Financial Holdings. It trades about 0.12 of its total potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.19 per unit of volatility. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Century Bank vs. Esquire Financial Holdings
Performance |
| Timeline |
| US Century Bank |
| Esquire Financial |
US Century and Esquire Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Century and Esquire Financial
The main advantage of trading using opposite US Century and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Century 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.| US Century vs. Bank of San | US Century vs. Pioneer Bankcorp | US Century vs. Liberty Northwest Bancorp | US Century vs. Summit Bancshares |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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