Correlation Between OceanFirst Financial and Peoples Bancorp
Can any of the company-specific risk be diversified away by investing in both OceanFirst Financial and Peoples 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 OceanFirst Financial and Peoples Bancorp 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 Peoples Bancorp, you can compare the effects of market volatilities on OceanFirst Financial and Peoples 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 OceanFirst Financial with a short position of Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Peoples Bancorp.
Diversification Opportunities for OceanFirst Financial and Peoples Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between OceanFirst and Peoples is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Peoples Bancorp go up and down completely randomly.
Pair Corralation between OceanFirst Financial and Peoples Bancorp
Given the investment horizon of 90 days OceanFirst Financial Corp is expected to generate 1.23 times more return on investment than Peoples Bancorp. However, OceanFirst Financial is 1.23 times more volatile than Peoples Bancorp. It trades about 0.19 of its potential returns per unit of risk. Peoples Bancorp is currently generating about 0.18 per unit of risk. If you would invest 1,810 in OceanFirst Financial Corp on August 29, 2024 and sell it today you would earn a total of 305.00 from holding OceanFirst Financial Corp or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OceanFirst Financial Corp vs. Peoples Bancorp
Performance |
| Timeline |
| OceanFirst Financial Corp |
| Peoples Bancorp |
OceanFirst Financial and Peoples Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OceanFirst Financial and Peoples Bancorp
The main advantage of trading using opposite OceanFirst Financial and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, Peoples 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp'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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
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| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |