Correlation Between Metropolitan Bank and Esquire Financial
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank 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 Metropolitan Bank and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Bank Holding and Esquire Financial Holdings, you can compare the effects of market volatilities on Metropolitan Bank 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 Metropolitan Bank with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and Esquire Financial.
Diversification Opportunities for Metropolitan Bank and Esquire Financial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metropolitan and Esquire is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Holding and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and Metropolitan Bank 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 Metropolitan Bank Holding 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 Metropolitan Bank i.e., Metropolitan Bank and Esquire Financial go up and down completely randomly.
Pair Corralation between Metropolitan Bank and Esquire Financial
Considering the 90-day investment horizon Metropolitan Bank Holding is expected to generate 2.28 times more return on investment than Esquire Financial. However, Metropolitan Bank is 2.28 times more volatile than Esquire Financial Holdings. It trades about 0.05 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.06 per unit of risk. If you would invest 2,877 in Metropolitan Bank Holding on December 30, 2023 and sell it today you would earn a total of 973.00 from holding Metropolitan Bank Holding or generate 33.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Metropolitan Bank Holding vs. Esquire Financial Holdings
Performance |
Timeline |
Metropolitan Bank Holding |
Esquire Financial |
Metropolitan Bank and Esquire Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metropolitan Bank and Esquire Financial
The main advantage of trading using opposite Metropolitan Bank and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank 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.Metropolitan Bank vs. Noble Plc | Metropolitan Bank vs. SEI Investments | Metropolitan Bank vs. Sun Life Financial | Metropolitan Bank vs. Transocean |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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