Correlation Between OceanFirst Financial and First Ottawa
Can any of the company-specific risk be diversified away by investing in both OceanFirst Financial and First Ottawa 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 First Ottawa 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 First Ottawa Bancshares, you can compare the effects of market volatilities on OceanFirst Financial and First Ottawa 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 First Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and First Ottawa.
Diversification Opportunities for OceanFirst Financial and First Ottawa
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OceanFirst and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares 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 First Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and First Ottawa go up and down completely randomly.
Pair Corralation between OceanFirst Financial and First Ottawa
Assuming the 90 days horizon OceanFirst Financial is expected to generate 5.53 times less return on investment than First Ottawa. But when comparing it to its historical volatility, OceanFirst Financial Corp is 1.88 times less risky than First Ottawa. It trades about 0.07 of its potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 11,500 in First Ottawa Bancshares on August 29, 2024 and sell it today you would earn a total of 501.00 from holding First Ottawa Bancshares or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
OceanFirst Financial Corp vs. First Ottawa Bancshares
Performance |
| Timeline |
| OceanFirst Financial Corp |
| First Ottawa Bancshares |
OceanFirst Financial and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OceanFirst Financial and First Ottawa
The main advantage of trading using opposite OceanFirst Financial and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, First Ottawa 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 First Ottawa will offset losses from the drop in First Ottawa's long position.| OceanFirst Financial vs. Capital One Financial | OceanFirst Financial vs. Capital One Financial | OceanFirst Financial vs. Bank of America | OceanFirst Financial vs. KeyCorp |
| First Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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