Correlation Between Dime Community and First Foundation
Can any of the company-specific risk be diversified away by investing in both Dime Community and First Foundation 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 First Foundation 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 First Foundation, you can compare the effects of market volatilities on Dime Community and First Foundation 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 First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and First Foundation.
Diversification Opportunities for Dime Community and First Foundation
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dime and First is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation 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 First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of Dime Community i.e., Dime Community and First Foundation go up and down completely randomly.
Pair Corralation between Dime Community and First Foundation
Given the investment horizon of 90 days Dime Community Bancshares is expected to generate 0.56 times more return on investment than First Foundation. However, Dime Community Bancshares is 1.8 times less risky than First Foundation. It trades about 0.0 of its potential returns per unit of risk. First Foundation is currently generating about -0.24 per unit of risk. If you would invest 3,078 in Dime Community Bancshares on November 29, 2024 and sell it today you would lose (12.00) from holding Dime Community Bancshares or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. First Foundation
Performance |
| Timeline |
| Dime Community Bancshares |
| First Foundation |
Dime Community and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and First Foundation
The main advantage of trading using opposite Dime Community and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, First Foundation 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 First Foundation will offset losses from the drop in First Foundation'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 |
| First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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