Correlation Between Dime Community and United Community
Can any of the company-specific risk be diversified away by investing in both Dime Community and United Community 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 United Community 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 United Community Banks, you can compare the effects of market volatilities on Dime Community and United Community 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 United Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and United Community.
Diversification Opportunities for Dime Community and United Community
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dime and United is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and United Community Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks 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 United Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks has no effect on the direction of Dime Community i.e., Dime Community and United Community go up and down completely randomly.
Pair Corralation between Dime Community and United Community
Assuming the 90 days horizon Dime Community Bancshares is expected to generate 1.6 times more return on investment than United Community. However, Dime Community is 1.6 times more volatile than United Community Banks. It trades about 0.06 of its potential returns per unit of risk. United Community Banks is currently generating about 0.08 per unit of risk. If you would invest 1,447 in Dime Community Bancshares on August 28, 2024 and sell it today you would earn a total of 552.00 from holding Dime Community Bancshares or generate 38.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.4% |
| Values | Daily Returns |
Dime Community Bancshares vs. United Community Banks
Performance |
| Timeline |
| Dime Community Bancshares |
| United Community Banks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dime Community and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and United Community
The main advantage of trading using opposite Dime Community and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, United Community 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 United Community will offset losses from the drop in United Community'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 |
| United Community vs. Pinnacle Financial Partners | United Community vs. Wintrust Financial Corp | United Community vs. Heartland Financial USA | United Community vs. OceanFirst Financial Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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