Correlation Between Citigroup and Esquire Financial

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

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

Diversification Opportunities for Citigroup and Esquire Financial

0.95

Correlation Coefficient

Citigroup  Esquire Financial

Almost no diversification

The 3 months correlation between Citigroup and Esquire is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Esquire Financial go up and down completely randomly.

Pair Corralation between Citigroup and Esquire Financial

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.19 times less return on investment than Esquire Financial. But when comparing it to its historical volatility, Citigroup is 1.11 times less risky than Esquire Financial. It trades about 0.21 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,960  in Esquire Financial Holdings on September 11, 2024 and sell it today you would earn a total of  2,002  from holding Esquire Financial Holdings or generate 33.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Esquire Financial Holdings

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Esquire Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Esquire Financial Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Esquire Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Esquire Financial

The main advantage of trading using opposite Citigroup and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.

The idea behind Citigroup and Esquire Financial Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.