Correlation Between Luther Burbank and Esquire Financial

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Can any of the company-specific risk be diversified away by investing in both Luther Burbank 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 Luther Burbank and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luther Burbank and Esquire Financial Holdings, you can compare the effects of market volatilities on Luther Burbank 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 Luther Burbank with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luther Burbank and Esquire Financial.

Diversification Opportunities for Luther Burbank and Esquire Financial

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Luther and Esquire is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Luther Burbank 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 Luther Burbank 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 Luther Burbank i.e., Luther Burbank and Esquire Financial go up and down completely randomly.

Pair Corralation between Luther Burbank and Esquire Financial

Considering the 90-day investment horizon Luther Burbank is expected to generate 0.21 times more return on investment than Esquire Financial. However, Luther Burbank is 4.8 times less risky than Esquire Financial. It trades about 0.15 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about -0.14 per unit of risk. If you would invest  913.00  in Luther Burbank on December 29, 2023 and sell it today you would earn a total of  2.00  from holding Luther Burbank or generate 0.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy18.18%
ValuesDaily Returns

Luther Burbank  vs.  Esquire Financial Holdings

 Performance 
       Timeline  
Luther Burbank 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Luther Burbank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Esquire Financial 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Esquire Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esquire Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Luther Burbank and Esquire Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Luther Burbank and Esquire Financial

The main advantage of trading using opposite Luther Burbank and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank 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.
The idea behind Luther Burbank and Esquire Financial Holdings 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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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