Correlation Between Dime Community and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Dime Community and US Bancorp 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 US Bancorp 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 US Bancorp, you can compare the effects of market volatilities on Dime Community and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and US Bancorp.
Diversification Opportunities for Dime Community and US Bancorp
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dime and USB-PH is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Dime Community i.e., Dime Community and US Bancorp go up and down completely randomly.
Pair Corralation between Dime Community and US Bancorp
Assuming the 90 days horizon Dime Community Bancshares is expected to generate 2.53 times more return on investment than US Bancorp. However, Dime Community is 2.53 times more volatile than US Bancorp. It trades about 0.04 of its potential returns per unit of risk. US Bancorp is currently generating about 0.06 per unit of risk. If you would invest 1,937 in Dime Community Bancshares on September 22, 2024 and sell it today you would earn a total of 25.00 from holding Dime Community Bancshares or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. US Bancorp
Performance |
| Timeline |
| Dime Community Bancshares |
| US Bancorp |
Dime Community and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and US Bancorp
The main advantage of trading using opposite Dime Community and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp'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 |
| US Bancorp vs. Washington Federal | US Bancorp vs. Dime Community Bancshares | US Bancorp vs. Pinnacle Financial Partners |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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