Correlation Between Capitol Federal and Dime Community
Can any of the company-specific risk be diversified away by investing in both Capitol Federal 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 Capitol Federal and Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitol Federal Financial and Dime Community Bancshares, you can compare the effects of market volatilities on Capitol Federal 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 Capitol Federal with a short position of Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Federal and Dime Community.
Diversification Opportunities for Capitol Federal and Dime Community
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capitol and Dime is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Federal Financial 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 Capitol Federal 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 Capitol Federal Financial 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 Capitol Federal i.e., Capitol Federal and Dime Community go up and down completely randomly.
Pair Corralation between Capitol Federal and Dime Community
Given the investment horizon of 90 days Capitol Federal Financial is expected to under-perform the Dime Community. In addition to that, Capitol Federal is 1.24 times more volatile than Dime Community Bancshares. It trades about -0.01 of its total potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.02 per unit of volatility. If you would invest 1,805 in Dime Community Bancshares on November 2, 2024 and sell it today you would earn a total of 255.00 from holding Dime Community Bancshares or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitol Federal Financial vs. Dime Community Bancshares
Performance |
| Timeline |
| Capitol Federal Financial |
| Dime Community Bancshares |
Capitol Federal and Dime Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitol Federal and Dime Community
The main advantage of trading using opposite Capitol Federal and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitol Federal 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.| Capitol Federal vs. Independent Bank | Capitol Federal vs. BankFinancial | Capitol Federal vs. Business First Bancshares | Capitol Federal vs. First Bancorp |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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