Correlation Between Esquire Financial and International Bancshares

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

Diversification Opportunities for Esquire Financial and International Bancshares

0.94

Correlation Coefficient

Esquire Financial  International Bancshares

Almost no diversification

The 3 months correlation between Esquire and International is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of Esquire Financial i.e., Esquire Financial and International Bancshares go up and down completely randomly.

Pair Corralation between Esquire Financial and International Bancshares

Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 1.07 times more return on investment than International Bancshares. However, Esquire Financial is 1.07 times more volatile than International Bancshares. It trades about 0.07 of its potential returns per unit of risk. International Bancshares is currently generating about 0.06 per unit of risk. If you would invest  4,079  in Esquire Financial Holdings on September 4, 2024 and sell it today you would earn a total of  3,713  from holding Esquire Financial Holdings or generate 91.03% return on investment over 90 days.

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

Esquire Financial Holdings  vs.  International Bancshares

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 unsteady basic indicators, Esquire Financial reported solid returns over the last few months and may actually be approaching a breakup point.

International Bancshares

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, International Bancshares exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esquire Financial and International Bancshares

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

The idea behind Esquire Financial Holdings and International Bancshares 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.