Correlation Between Esquire Financial and US Century

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

Diversification Opportunities for Esquire Financial and US Century

0.94

Correlation Coefficient

Esquire Financial  US Century

Almost no diversification

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

Pair Corralation between Esquire Financial and US Century

Considering the 90-day investment horizon Esquire Financial is expected to generate 1.29 times less return on investment than US Century. But when comparing it to its historical volatility, Esquire Financial Holdings is 1.49 times less risky than US Century. It trades about 0.22 of its potential returns per unit of risk. US Century Bank is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,389  in US Century Bank on September 12, 2024 and sell it today you would earn a total of  574.00  from holding US Century Bank or generate 41.32% 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.  US Century Bank

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.

US Century Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Century Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, US Century sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esquire Financial and US Century

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

The idea behind Esquire Financial Holdings and US Century Bank 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.