Correlation Between Finward Bancorp and Esquire Financial

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

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

Diversification Opportunities for Finward Bancorp and Esquire Financial

-0.69

Correlation Coefficient

Finward Bancorp  Esquire Financial

Excellent diversification

The 3 months correlation between Finward and Esquire is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Finward Bancorp 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 Finward Bancorp 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 Finward Bancorp i.e., Finward Bancorp and Esquire Financial go up and down completely randomly.

Pair Corralation between Finward Bancorp and Esquire Financial

Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Esquire Financial. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 1.8 times less risky than Esquire Financial. The stock trades about -0.1 of its potential returns per unit of risk. The Esquire Financial Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,794  in Esquire Financial Holdings on December 2, 2024 and sell it today you would lose (82.00) from holding Esquire Financial Holdings or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Finward Bancorp  vs.  Esquire Financial Holdings

Finward Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finward Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 relatively invariable basic indicators, Esquire Financial is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Finward Bancorp and Esquire Financial

The main advantage of trading using opposite Finward Bancorp and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp 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 Finward Bancorp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.