Correlation Between Esquire Financial and HomeTrust Bancshares

Can any of the company-specific risk be diversified away by investing in both Esquire Financial and HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares, you can compare the effects of market volatilities on Esquire Financial and HomeTrust Bancshares 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 HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esquire Financial and HomeTrust Bancshares.

Diversification Opportunities for Esquire Financial and HomeTrust Bancshares

0.81

Correlation Coefficient

Esquire Financial  HomeTrust Bancshares

Very poor diversification

The 3 months correlation between Esquire and HomeTrust is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Esquire Financial Holdings and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares 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 HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Esquire Financial i.e., Esquire Financial and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Esquire Financial and HomeTrust Bancshares

Considering the 90-day investment horizon Esquire Financial Holdings is expected to generate 1.01 times more return on investment than HomeTrust Bancshares. However, Esquire Financial is 1.01 times more volatile than HomeTrust Bancshares. It trades about 0.07 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about -0.35 per unit of risk. If you would invest  7,747  in Esquire Financial Holdings on September 25, 2024 and sell it today you would earn a total of  166.00  from holding Esquire Financial Holdings or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Esquire Financial Holdings  vs.  HomeTrust Bancshares

Esquire Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esquire Financial Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Esquire Financial reported solid returns over the last few months and may actually be approaching a breakup point.

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Esquire Financial and HomeTrust Bancshares

The main advantage of trading using opposite Esquire Financial and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esquire Financial position performs unexpectedly, HomeTrust Bancshares 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 HomeTrust Bancshares will offset losses from the drop in HomeTrust Bancshares' long position.

The idea behind Esquire Financial Holdings and HomeTrust Bancshares 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.