Correlation Between First Guaranty and Dime Community
Can any of the company-specific risk be diversified away by investing in both First Guaranty and Dime 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 First Guaranty and Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Guaranty Bancshares and Dime Community Bancshares, you can compare the effects of market volatilities on First Guaranty and Dime 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 First Guaranty with a short position of Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Guaranty and Dime Community.
Diversification Opportunities for First Guaranty and Dime Community
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Dime is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Guaranty Bancshares and Dime Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dime Community Bancshares and First Guaranty 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 First Guaranty Bancshares are associated (or correlated) with Dime Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dime Community Bancshares has no effect on the direction of First Guaranty i.e., First Guaranty and Dime Community go up and down completely randomly.
Pair Corralation between First Guaranty and Dime Community
Assuming the 90 days horizon First Guaranty Bancshares is expected to generate 0.81 times more return on investment than Dime Community. However, First Guaranty Bancshares is 1.24 times less risky than Dime Community. It trades about 0.07 of its potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.05 per unit of risk. If you would invest 2,143 in First Guaranty Bancshares on August 28, 2024 and sell it today you would earn a total of 27.00 from holding First Guaranty Bancshares or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Guaranty Bancshares vs. Dime Community Bancshares
Performance |
| Timeline |
| First Guaranty Bancshares |
| Dime Community Bancshares |
First Guaranty and Dime Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Guaranty and Dime Community
The main advantage of trading using opposite First Guaranty and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Guaranty position performs unexpectedly, Dime 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 Dime Community will offset losses from the drop in Dime Community's long position.| First Guaranty vs. Capital One Financial | First Guaranty vs. Capital One Financial | First Guaranty vs. Bank of America |
| Dime Community vs. First Citizens BancShares | Dime Community vs. Fifth Third Bancorp | Dime Community vs. OceanFirst Financial Corp | Dime Community vs. Fifth Third 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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