Correlation Between Columbia Financial and OceanFirst Financial
Can any of the company-specific risk be diversified away by investing in both Columbia Financial and OceanFirst 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 Columbia Financial and OceanFirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Financial and OceanFirst Financial Corp, you can compare the effects of market volatilities on Columbia Financial and OceanFirst 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 Columbia Financial with a short position of OceanFirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Financial and OceanFirst Financial.
Diversification Opportunities for Columbia Financial and OceanFirst Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and OceanFirst is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Financial and OceanFirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanFirst Financial Corp and Columbia 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 Columbia Financial are associated (or correlated) with OceanFirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanFirst Financial Corp has no effect on the direction of Columbia Financial i.e., Columbia Financial and OceanFirst Financial go up and down completely randomly.
Pair Corralation between Columbia Financial and OceanFirst Financial
Given the investment horizon of 90 days Columbia Financial is expected to generate 2.82 times less return on investment than OceanFirst Financial. But when comparing it to its historical volatility, Columbia Financial is 1.15 times less risky than OceanFirst Financial. It trades about 0.01 of its potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,687 in OceanFirst Financial Corp on August 24, 2024 and sell it today you would earn a total of 401.00 from holding OceanFirst Financial Corp or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Financial vs. OceanFirst Financial Corp
Performance |
| Timeline |
| Columbia Financial |
| OceanFirst Financial Corp |
Columbia Financial and OceanFirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Financial and OceanFirst Financial
The main advantage of trading using opposite Columbia Financial and OceanFirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Financial position performs unexpectedly, OceanFirst 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 OceanFirst Financial will offset losses from the drop in OceanFirst Financial's long position.| Columbia Financial vs. Banco Bradesco SA | Columbia Financial vs. Itau Unibanco Banco | Columbia Financial vs. Banco Santander Brasil | Columbia Financial vs. Western Alliance Bancorporation |
| OceanFirst Financial vs. Flushing Financial | OceanFirst Financial vs. Dime Community Bancshares | OceanFirst Financial vs. Peapack Gladstone Financial | OceanFirst Financial vs. Heritage Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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