Correlation Between OceanFirst Financial and Valley National
Can any of the company-specific risk be diversified away by investing in both OceanFirst Financial and Valley National 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 Valley National 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 Valley National Bancorp, you can compare the effects of market volatilities on OceanFirst Financial and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Valley National.
Diversification Opportunities for OceanFirst Financial and Valley National
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OceanFirst and Valley is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Valley National go up and down completely randomly.
Pair Corralation between OceanFirst Financial and Valley National
Assuming the 90 days horizon OceanFirst Financial is expected to generate 9.12 times less return on investment than Valley National. But when comparing it to its historical volatility, OceanFirst Financial Corp is 6.11 times less risky than Valley National. It trades about 0.1 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 677.00 in Valley National Bancorp on September 1, 2024 and sell it today you would earn a total of 387.00 from holding Valley National Bancorp or generate 57.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OceanFirst Financial Corp vs. Valley National Bancorp
Performance |
| Timeline |
| OceanFirst Financial Corp |
| Valley National Bancorp |
OceanFirst Financial and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OceanFirst Financial and Valley National
The main advantage of trading using opposite OceanFirst Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.| OceanFirst Financial vs. KeyCorp | OceanFirst Financial vs. KeyCorp | OceanFirst Financial vs. Fifth Third Bancorp | OceanFirst Financial vs. Citizens Financial Group |
| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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