Correlation Between Esquire Financial and US Bancorp

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

Diversification Opportunities for Esquire Financial and US Bancorp

0.2

Correlation Coefficient

Esquire Financial  US Bancorp

Modest diversification

The 3 months correlation between Esquire and USB is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Esquire Financial i.e., Esquire Financial and US Bancorp go up and down completely randomly.

Pair Corralation between Esquire Financial and US Bancorp

Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 1.23 times more return on investment than US Bancorp. However, Esquire Financial is 1.23 times more volatile than US Bancorp. It trades about 0.08 of its potential returns per unit of risk. US Bancorp is currently generating about 0.02 per unit of risk. If you would invest  4,700  in Esquire Financial Holdings on December 12, 2024 and sell it today you would earn a total of  2,405  from holding Esquire Financial Holdings or generate 51.17% 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.  US Bancorp

Esquire Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esquire Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

US Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Esquire Financial and US Bancorp

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

The idea behind Esquire Financial Holdings and US Bancorp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.