Correlation Between OceanFirst Financial and Columbia Financial
Can any of the company-specific risk be diversified away by investing in both OceanFirst Financial and Columbia 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 OceanFirst Financial and Columbia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OceanFirst Financial Corp and Columbia Financial, you can compare the effects of market volatilities on OceanFirst Financial and Columbia 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 OceanFirst Financial with a short position of Columbia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Columbia Financial.
Diversification Opportunities for OceanFirst Financial and Columbia Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OceanFirst and Columbia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Columbia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Financial and OceanFirst 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 OceanFirst Financial Corp are associated (or correlated) with Columbia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Financial has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Columbia Financial go up and down completely randomly.
Pair Corralation between OceanFirst Financial and Columbia Financial
Given the investment horizon of 90 days OceanFirst Financial Corp is expected to generate 1.16 times more return on investment than Columbia Financial. However, OceanFirst Financial is 1.16 times more volatile than Columbia Financial. It trades about 0.0 of its potential returns per unit of risk. Columbia Financial is currently generating about -0.02 per unit of risk. If you would invest 2,244 in OceanFirst Financial Corp on November 2, 2024 and sell it today you would lose (432.00) from holding OceanFirst Financial Corp or give up 19.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OceanFirst Financial Corp vs. Columbia Financial
Performance |
| Timeline |
| OceanFirst Financial Corp |
| Columbia Financial |
OceanFirst Financial and Columbia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OceanFirst Financial and Columbia Financial
The main advantage of trading using opposite OceanFirst Financial and Columbia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, Columbia 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 Columbia Financial will offset losses from the drop in Columbia Financial's long position.| OceanFirst Financial vs. Flushing Financial | OceanFirst Financial vs. Dime Community Bancshares | OceanFirst Financial vs. Peapack Gladstone Financial | OceanFirst Financial vs. Heritage Financial |
| Columbia Financial vs. Community West Bancshares | Columbia Financial vs. First Financial Northwest | Columbia Financial vs. First Northwest Bancorp | Columbia Financial vs. First Capital |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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