Correlation Between Dime Community and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Dime Community and First Guaranty 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 Guaranty 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 Guaranty Bancshares, you can compare the effects of market volatilities on Dime Community and First Guaranty 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 Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and First Guaranty.
Diversification Opportunities for Dime Community and First Guaranty
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dime and First is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares 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 Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Dime Community i.e., Dime Community and First Guaranty go up and down completely randomly.
Pair Corralation between Dime Community and First Guaranty
Assuming the 90 days horizon Dime Community is expected to generate 1.88 times less return on investment than First Guaranty. But when comparing it to its historical volatility, Dime Community Bancshares is 3.59 times less risky than First Guaranty. It trades about 0.46 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,979 in First Guaranty Bancshares on November 2, 2024 and sell it today you would earn a total of 177.00 from holding First Guaranty Bancshares or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. First Guaranty Bancshares
Performance |
| Timeline |
| Dime Community Bancshares |
| First Guaranty Bancshares |
Dime Community and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and First Guaranty
The main advantage of trading using opposite Dime Community and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, First Guaranty 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 Guaranty will offset losses from the drop in First Guaranty'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 |
| First Guaranty vs. CNB Financial | First Guaranty vs. First Citizens BancShares | First Guaranty vs. Texas Capital Bancshares | First Guaranty vs. Merchants Bancorp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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