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 generate 0.66 times more return on investment than Esquire Financial. However, Finward Bancorp is 1.5 times less risky than Esquire Financial. It trades about 0.04 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about -0.03 per unit of risk. If you would invest  2,818  in Finward Bancorp on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Finward Bancorp or generate 3.26% return on investment 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Finward Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.