Correlation Between Virginia National and Esquire Financial

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

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

Diversification Opportunities for Virginia National and Esquire Financial

-0.25

Correlation Coefficient

Virginia National  Esquire Financial

Very good diversification

The 3 months correlation between Virginia and Esquire is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and Esquire Financial go up and down completely randomly.

Pair Corralation between Virginia National and Esquire Financial

Given the investment horizon of 90 days Virginia National is expected to generate 2.57 times less return on investment than Esquire Financial. In addition to that, Virginia National is 1.12 times more volatile than Esquire Financial Holdings. It trades about 0.03 of its total potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.08 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Virginia National Bankshares  vs.  Esquire Financial Holdings

Virginia National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virginia National Bankshares 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 fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Virginia National and Esquire Financial

The main advantage of trading using opposite Virginia National and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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 Virginia National Bankshares 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..