Correlation Between Heartland Financial and OceanFirst Financial
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and OceanFirst 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 Heartland Financial and OceanFirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and OceanFirst Financial Corp, you can compare the effects of market volatilities on Heartland Financial and OceanFirst 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 Heartland Financial with a short position of OceanFirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and OceanFirst Financial.
Diversification Opportunities for Heartland Financial and OceanFirst Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heartland and OceanFirst is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and OceanFirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanFirst Financial Corp and Heartland Financial 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 Heartland Financial USA are associated (or correlated) with OceanFirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanFirst Financial Corp has no effect on the direction of Heartland Financial i.e., Heartland Financial and OceanFirst Financial go up and down completely randomly.
Pair Corralation between Heartland Financial and OceanFirst Financial
Assuming the 90 days horizon Heartland Financial USA is expected to under-perform the OceanFirst Financial. In addition to that, Heartland Financial is 1.77 times more volatile than OceanFirst Financial Corp. It trades about -0.15 of its total potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.23 per unit of volatility. If you would invest 2,481 in OceanFirst Financial Corp on November 5, 2024 and sell it today you would earn a total of 29.00 from holding OceanFirst Financial Corp or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Financial USA vs. OceanFirst Financial Corp
Performance |
| Timeline |
| Heartland Financial USA |
| OceanFirst Financial Corp |
Heartland Financial and OceanFirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and OceanFirst Financial
The main advantage of trading using opposite Heartland Financial and OceanFirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, OceanFirst 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 OceanFirst Financial will offset losses from the drop in OceanFirst Financial's long position.| Heartland Financial vs. Wintrust Financial Corp | Heartland Financial vs. Pinnacle Financial Partners | Heartland Financial vs. WesBanco | Heartland Financial vs. OceanFirst Financial Corp |
| OceanFirst Financial vs. Fifth Third Bancorp | OceanFirst Financial vs. Huntington Bancshares Incorporated | OceanFirst Financial vs. Washington Federal | OceanFirst Financial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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