Correlation Between Dime Community and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Dime Community and Brighthouse 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 Brighthouse 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 Brighthouse Financial, you can compare the effects of market volatilities on Dime Community and Brighthouse 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 Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Brighthouse Financial.
Diversification Opportunities for Dime Community and Brighthouse Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dime and Brighthouse is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Dime Community i.e., Dime Community and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Dime Community and Brighthouse Financial
Assuming the 90 days horizon Dime Community Bancshares is expected to generate 0.82 times more return on investment than Brighthouse Financial. However, Dime Community Bancshares is 1.22 times less risky than Brighthouse Financial. It trades about 0.08 of its potential returns per unit of risk. Brighthouse Financial is currently generating about -0.05 per unit of risk. If you would invest 1,952 in Dime Community Bancshares on October 20, 2024 and sell it today you would earn a total of 83.00 from holding Dime Community Bancshares or generate 4.25% 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. Brighthouse Financial
Performance |
| Timeline |
| Dime Community Bancshares |
| Brighthouse Financial |
Dime Community and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Brighthouse Financial
The main advantage of trading using opposite Dime Community and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Brighthouse 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| Dime Community vs. First Citizens BancShares | Dime Community vs. Fifth Third Bancorp | Dime Community vs. OceanFirst Financial Corp | Dime Community vs. Fifth Third Bancorp |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. First Citizens BancShares |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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