Correlation Between Esquire Financial and FB Financial
Can any of the company-specific risk be diversified away by investing in both Esquire Financial and FB 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 FB 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 FB Financial Corp, you can compare the effects of market volatilities on Esquire Financial and FB 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 FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and FB Financial.
Diversification Opportunities for Esquire Financial and FB Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Esquire and FBK is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB 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 FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of Esquire Financial i.e., Esquire Financial and FB Financial go up and down completely randomly.
Pair Corralation between Esquire Financial and FB Financial
Considering the 90-day investment horizon Esquire Financial Holdings is expected to under-perform the FB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Esquire Financial Holdings is 1.29 times less risky than FB Financial. The stock trades about -0.22 of its potential returns per unit of risk. The FB Financial Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,594 in FB Financial Corp on January 20, 2024 and sell it today you would lose (38.00) from holding FB Financial Corp or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esquire Financial Holdings vs. FB Financial Corp
Performance |
| Timeline |
| Esquire Financial |
| FB Financial Corp |
Esquire Financial and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esquire Financial and FB Financial
The main advantage of trading using opposite Esquire Financial and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, FB 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 FB Financial will offset losses from the drop in FB Financial's long position.| Esquire Financial vs. Home Bancorp | Esquire Financial vs. Heritage Financial | Esquire Financial vs. Lake Shore 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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