Correlation Between PCB Bancorp and Esquire Financial

Can any of the company-specific risk be diversified away by investing in both PCB Bancorp 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 PCB Bancorp and Esquire Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCB Bancorp and Esquire Financial Holdings, you can compare the effects of market volatilities on PCB Bancorp 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 PCB Bancorp with a short position of Esquire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCB Bancorp and Esquire Financial.

Diversification Opportunities for PCB Bancorp and Esquire Financial

0.85

Correlation Coefficient

PCB Bancorp  Esquire Financial

Very poor diversification

The 3 months correlation between PCB and Esquire is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PCB Bancorp and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial and PCB Bancorp 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 PCB Bancorp 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 PCB Bancorp i.e., PCB Bancorp and Esquire Financial go up and down completely randomly.

Pair Corralation between PCB Bancorp and Esquire Financial

Considering the 90-day investment horizon PCB Bancorp is expected to generate 0.96 times more return on investment than Esquire Financial. However, PCB Bancorp is 1.04 times less risky than Esquire Financial. It trades about 0.13 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.09 per unit of risk. If you would invest  1,974  in PCB Bancorp on May 27, 2025 and sell it today you would earn a total of  265.00  from holding PCB Bancorp or generate 13.42% return on investment over 90 days.

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

PCB Bancorp  vs.  Esquire Financial Holdings

PCB Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in PCB Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, PCB Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Esquire Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Esquire Financial Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Esquire Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with PCB Bancorp and Esquire Financial

The main advantage of trading using opposite PCB Bancorp and Esquire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCB Bancorp 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 PCB Bancorp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.