Correlation Between Financial Institutions and Kearny Financial
Can any of the company-specific risk be diversified away by investing in both Financial Institutions and Kearny 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 Financial Institutions and Kearny Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions and Kearny Financial Corp, you can compare the effects of market volatilities on Financial Institutions and Kearny 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 Financial Institutions with a short position of Kearny Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and Kearny Financial.
Diversification Opportunities for Financial Institutions and Kearny Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Financial and Kearny is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp and Financial Institutions 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 Financial Institutions are associated (or correlated) with Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of Financial Institutions i.e., Financial Institutions and Kearny Financial go up and down completely randomly.
Pair Corralation between Financial Institutions and Kearny Financial
Given the investment horizon of 90 days Financial Institutions is expected to under-perform the Kearny Financial. But the stock apears to be less risky and, when comparing its historical volatility, Financial Institutions is 1.65 times less risky than Kearny Financial. The stock trades about -0.05 of its potential returns per unit of risk. The Kearny Financial Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Kearny Financial Corp on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Kearny Financial Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Financial Institutions vs. Kearny Financial Corp
Performance |
| Timeline |
| Financial Institutions |
| Kearny Financial Corp |
Financial Institutions and Kearny Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Institutions and Kearny Financial
The main advantage of trading using opposite Financial Institutions and Kearny Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions position performs unexpectedly, Kearny 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 Kearny Financial will offset losses from the drop in Kearny Financial's long position.| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest Bancorp |
| Kearny Financial vs. National Bank Holdings | Kearny Financial vs. Community West Bancshares | Kearny Financial vs. Financial Institutions | Kearny Financial vs. Heritage Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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