Correlation Between Esquire Financial and Byline Bancorp
Can any of the company-specific risk be diversified away by investing in both Esquire Financial and Byline Bancorp 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 Byline Bancorp 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 Byline Bancorp, you can compare the effects of market volatilities on Esquire Financial and Byline Bancorp 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 Byline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and Byline Bancorp.
Diversification Opportunities for Esquire Financial and Byline Bancorp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Esquire and Byline is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and Byline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byline Bancorp 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 Byline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byline Bancorp has no effect on the direction of Esquire Financial i.e., Esquire Financial and Byline Bancorp go up and down completely randomly.
Pair Corralation between Esquire Financial and Byline Bancorp
Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 0.97 times more return on investment than Byline Bancorp. However, Esquire Financial Holdings is 1.03 times less risky than Byline Bancorp. It trades about 0.05 of its potential returns per unit of risk. Byline Bancorp is currently generating about 0.03 per unit of risk. If you would invest 3,799 in Esquire Financial Holdings on January 25, 2024 and sell it today you would earn a total of 882.00 from holding Esquire Financial Holdings or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esquire Financial Holdings vs. Byline Bancorp
Performance |
| Timeline |
| Esquire Financial |
| Byline Bancorp |
Esquire Financial and Byline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esquire Financial and Byline Bancorp
The main advantage of trading using opposite Esquire Financial and Byline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, Byline Bancorp 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 Byline Bancorp will offset losses from the drop in Byline Bancorp's long position.| Esquire Financial vs. HMN Financial | Esquire Financial vs. Lake Shore Bancorp | Esquire Financial vs. Rhinebeck Bancorp |
| Byline Bancorp vs. HMN Financial | Byline Bancorp vs. Lake Shore Bancorp | Byline Bancorp vs. Rhinebeck Bancorp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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