Correlation Between Cathay General and Dime Community
Can any of the company-specific risk be diversified away by investing in both Cathay General and Dime Community 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 Cathay General and Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay General Bancorp and Dime Community Bancshares, you can compare the effects of market volatilities on Cathay General and Dime Community 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 Cathay General with a short position of Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay General and Dime Community.
Diversification Opportunities for Cathay General and Dime Community
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cathay and Dime is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cathay General Bancorp and Dime Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dime Community Bancshares and Cathay General 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 Cathay General Bancorp are associated (or correlated) with Dime Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dime Community Bancshares has no effect on the direction of Cathay General i.e., Cathay General and Dime Community go up and down completely randomly.
Pair Corralation between Cathay General and Dime Community
Given the investment horizon of 90 days Cathay General Bancorp is expected to generate 1.13 times more return on investment than Dime Community. However, Cathay General is 1.13 times more volatile than Dime Community Bancshares. It trades about 0.02 of its potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.02 per unit of risk. If you would invest 4,129 in Cathay General Bancorp on November 2, 2024 and sell it today you would earn a total of 620.00 from holding Cathay General Bancorp or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay General Bancorp vs. Dime Community Bancshares
Performance |
| Timeline |
| Cathay General Bancorp |
| Dime Community Bancshares |
Cathay General and Dime Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay General and Dime Community
The main advantage of trading using opposite Cathay General and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay General position performs unexpectedly, Dime Community 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 Dime Community will offset losses from the drop in Dime Community's long position.| Cathay General vs. Glacier Bancorp | Cathay General vs. Capitol Federal Financial | Cathay General vs. Byline Bancorp | Cathay General vs. First Financial Bankshares |
| Dime Community vs. First Citizens BancShares | Dime Community vs. Fifth Third Bancorp | Dime Community vs. OceanFirst Financial Corp | Dime Community vs. Fifth Third 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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