Correlation Between FVCBankcorp and Esquire Financial
Can any of the company-specific risk be diversified away by investing in both FVCBankcorp 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 FVCBankcorp and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FVCBankcorp and Esquire Financial Holdings, you can compare the effects of market volatilities on FVCBankcorp 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 FVCBankcorp with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FVCBankcorp and Esquire Financial.
Diversification Opportunities for FVCBankcorp and Esquire Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FVCBankcorp and Esquire is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FVCBankcorp and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp i.e., FVCBankcorp and Esquire Financial go up and down completely randomly.
Pair Corralation between FVCBankcorp and Esquire Financial
Given the investment horizon of 90 days FVCBankcorp is expected to under-perform the Esquire Financial. In addition to that, FVCBankcorp is 1.93 times more volatile than Esquire Financial Holdings. It trades about -0.08 of its total potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.06 per unit of volatility. If you would invest 4,597 in Esquire Financial Holdings on January 26, 2024 and sell it today you would earn a total of 98.00 from holding Esquire Financial Holdings or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FVCBankcorp vs. Esquire Financial Holdings
Performance |
| Timeline |
| FVCBankcorp |
| Esquire Financial |
FVCBankcorp and Esquire Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FVCBankcorp and Esquire Financial
The main advantage of trading using opposite FVCBankcorp and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FVCBankcorp 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.| FVCBankcorp vs. HMN Financial | FVCBankcorp vs. Home Federal Bancorp | FVCBankcorp vs. First Financial Northwest | FVCBankcorp vs. First Northwest Bancorp |
| Esquire Financial vs. HMN Financial | Esquire Financial vs. Home Federal Bancorp | Esquire Financial vs. First Financial Northwest | Esquire Financial vs. First Northwest 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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