Correlation Between Esquire Financial and Apple
Can any of the company-specific risk be diversified away by investing in both Esquire Financial and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Esquire Financial and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and Apple.
Diversification Opportunities for Esquire Financial and Apple
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Esquire and Apple is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Esquire Financial i.e., Esquire Financial and Apple go up and down completely randomly.
Pair Corralation between Esquire Financial and Apple
Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 1.2 times more return on investment than Apple. However, Esquire Financial is 1.2 times more volatile than Apple Inc. It trades about 0.04 of its potential returns per unit of risk. Apple Inc is currently generating about 0.02 per unit of risk. If you would invest 3,592 in Esquire Financial Holdings on January 26, 2024 and sell it today you would earn a total of 1,089 from holding Esquire Financial Holdings or generate 30.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esquire Financial Holdings vs. Apple Inc
Performance |
| Timeline |
| Esquire Financial |
| Apple Inc |
Esquire Financial and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esquire Financial and Apple
The main advantage of trading using opposite Esquire Financial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Esquire Financial Holdings and Apple Inc 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.Check out your portfolio center.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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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