Correlation Between Dime Community and Columbia Financial
Can any of the company-specific risk be diversified away by investing in both Dime Community and Columbia 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 Columbia 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 Columbia Financial, you can compare the effects of market volatilities on Dime Community and Columbia 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 Columbia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Columbia Financial.
Diversification Opportunities for Dime Community and Columbia Financial
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dime and Columbia is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Columbia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia 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 Columbia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Financial has no effect on the direction of Dime Community i.e., Dime Community and Columbia Financial go up and down completely randomly.
Pair Corralation between Dime Community and Columbia Financial
Assuming the 90 days horizon Dime Community Bancshares is expected to generate 0.82 times more return on investment than Columbia Financial. However, Dime Community Bancshares is 1.21 times less risky than Columbia Financial. It trades about 0.02 of its potential returns per unit of risk. Columbia Financial is currently generating about -0.02 per unit of risk. 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 |
Dime Community Bancshares vs. Columbia Financial
Performance |
| Timeline |
| Dime Community Bancshares |
| Columbia Financial |
Dime Community and Columbia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Columbia Financial
The main advantage of trading using opposite Dime Community and Columbia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Columbia 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 Columbia Financial will offset losses from the drop in Columbia 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 |
| Columbia Financial vs. Community West Bancshares | Columbia Financial vs. First Financial Northwest | Columbia Financial vs. First Northwest Bancorp | Columbia Financial vs. First Capital |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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