Correlation Between Peapack Gladstone and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Peapack Gladstone and Heritage 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 Peapack Gladstone and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peapack Gladstone Financial and Heritage Financial, you can compare the effects of market volatilities on Peapack Gladstone and Heritage 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 Peapack Gladstone with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peapack Gladstone and Heritage Financial.
Diversification Opportunities for Peapack Gladstone and Heritage Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Peapack and Heritage is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Peapack Gladstone 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 Peapack Gladstone Financial are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Heritage Financial go up and down completely randomly.
Pair Corralation between Peapack Gladstone and Heritage Financial
Considering the 90-day investment horizon Peapack Gladstone Financial is expected to under-perform the Heritage Financial. In addition to that, Peapack Gladstone is 1.16 times more volatile than Heritage Financial. It trades about -0.06 of its total potential returns per unit of risk. Heritage Financial is currently generating about 0.05 per unit of volatility. If you would invest 2,422 in Heritage Financial on October 24, 2024 and sell it today you would earn a total of 33.00 from holding Heritage Financial or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Peapack Gladstone Financial vs. Heritage Financial
Performance |
| Timeline |
| Peapack Gladstone |
| Heritage Financial |
Peapack Gladstone and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peapack Gladstone and Heritage Financial
The main advantage of trading using opposite Peapack Gladstone and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone position performs unexpectedly, Heritage 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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