Correlation Between Old Second and OceanFirst Financial
Can any of the company-specific risk be diversified away by investing in both Old Second 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 Old Second and OceanFirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Second Bancorp and OceanFirst Financial Corp, you can compare the effects of market volatilities on Old Second 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 Old Second with a short position of OceanFirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Second and OceanFirst Financial.
Diversification Opportunities for Old Second and OceanFirst Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and OceanFirst is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Old Second Bancorp 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 Old Second 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 Old Second Bancorp 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 Old Second i.e., Old Second and OceanFirst Financial go up and down completely randomly.
Pair Corralation between Old Second and OceanFirst Financial
Given the investment horizon of 90 days Old Second Bancorp is expected to generate 0.71 times more return on investment than OceanFirst Financial. However, Old Second Bancorp is 1.42 times less risky than OceanFirst Financial. It trades about 0.1 of its potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.07 per unit of risk. If you would invest 1,345 in Old Second Bancorp on August 29, 2024 and sell it today you would earn a total of 524.00 from holding Old Second Bancorp or generate 38.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Second Bancorp vs. OceanFirst Financial Corp
Performance |
| Timeline |
| Old Second Bancorp |
| OceanFirst Financial Corp |
Old Second and OceanFirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Second and OceanFirst Financial
The main advantage of trading using opposite Old Second and OceanFirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Second 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.| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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