Correlation Between Esquire Financial and Coastal Financial
Can any of the company-specific risk be diversified away by investing in both Esquire Financial and Coastal 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 Esquire Financial and Coastal Financial 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 Coastal Financial Corp, you can compare the effects of market volatilities on Esquire Financial and Coastal 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 Esquire Financial with a short position of Coastal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and Coastal Financial.
Diversification Opportunities for Esquire Financial and Coastal Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Esquire and Coastal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and Coastal Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Financial Corp 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 Coastal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Financial Corp has no effect on the direction of Esquire Financial i.e., Esquire Financial and Coastal Financial go up and down completely randomly.
Pair Corralation between Esquire Financial and Coastal Financial
Considering the 90-day investment horizon Esquire Financial is expected to generate 4.97 times less return on investment than Coastal Financial. But when comparing it to its historical volatility, Esquire Financial Holdings is 1.05 times less risky than Coastal Financial. It trades about 0.06 of its potential returns per unit of risk. Coastal Financial Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,688 in Coastal Financial Corp on January 26, 2024 and sell it today you would earn a total of 401.00 from holding Coastal Financial Corp or generate 10.87% 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. Coastal Financial Corp
Performance |
| Timeline |
| Esquire Financial |
| Coastal Financial Corp |
Esquire Financial and Coastal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esquire Financial and Coastal Financial
The main advantage of trading using opposite Esquire Financial and Coastal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, Coastal 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 Coastal Financial will offset losses from the drop in Coastal Financial's long position.| Esquire Financial vs. Home Bancorp | Esquire Financial vs. First Community | Esquire Financial vs. Affinity Bancshares |
| Coastal Financial vs. Home Bancorp | Coastal Financial vs. First Community | Coastal Financial vs. Affinity Bancshares |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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