Correlation Between Dime Community and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Dime Community and Bankwell 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 Dime Community and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dime Community Bancshares and Bankwell Financial Group, you can compare the effects of market volatilities on Dime Community and Bankwell 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 Dime Community with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Bankwell Financial.
Diversification Opportunities for Dime Community and Bankwell Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dime and Bankwell is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Dime Community 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 Dime Community Bancshares are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Dime Community i.e., Dime Community and Bankwell Financial go up and down completely randomly.
Pair Corralation between Dime Community and Bankwell Financial
Given the investment horizon of 90 days Dime Community Bancshares is expected to generate 1.26 times more return on investment than Bankwell Financial. However, Dime Community is 1.26 times more volatile than Bankwell Financial Group. It trades about 0.1 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.06 per unit of risk. If you would invest 2,209 in Dime Community Bancshares on August 28, 2024 and sell it today you would earn a total of 1,427 from holding Dime Community Bancshares or generate 64.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. Bankwell Financial Group
Performance |
| Timeline |
| Dime Community Bancshares |
| Bankwell Financial |
Dime Community and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Bankwell Financial
The main advantage of trading using opposite Dime Community and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Bankwell 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.| Dime Community vs. Peapack Gladstone Financial | Dime Community vs. Northfield Bancorp | Dime Community vs. Great Southern Bancorp | Dime Community vs. Heritage Financial |
| Bankwell Financial vs. Fifth Third Bancorp | Bankwell Financial vs. Zions Bancorporation | Bankwell Financial vs. Huntington Bancshares Incorporated | Bankwell Financial vs. Comerica |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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