Correlation Between New York and Territorial Bancorp
Can any of the company-specific risk be diversified away by investing in both New York and Territorial 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 New York and Territorial Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Community and Territorial Bancorp, you can compare the effects of market volatilities on New York and Territorial 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 New York with a short position of Territorial Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Territorial Bancorp.
Diversification Opportunities for New York and Territorial Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Territorial is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding New York Community and Territorial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Territorial Bancorp and New York 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 New York Community are associated (or correlated) with Territorial Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Territorial Bancorp has no effect on the direction of New York i.e., New York and Territorial Bancorp go up and down completely randomly.
Pair Corralation between New York and Territorial Bancorp
Assuming the 90 days horizon New York Community is expected to generate 1.92 times more return on investment than Territorial Bancorp. However, New York is 1.92 times more volatile than Territorial Bancorp. It trades about 0.12 of its potential returns per unit of risk. Territorial Bancorp is currently generating about -0.02 per unit of risk. If you would invest 1,009 in New York Community on September 10, 2024 and sell it today you would earn a total of 71.00 from holding New York Community or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Community vs. Territorial Bancorp
Performance |
| Timeline |
| New York Community |
| Territorial Bancorp |
New York and Territorial Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Territorial Bancorp
The main advantage of trading using opposite New York and Territorial Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, Territorial 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 Territorial Bancorp will offset losses from the drop in Territorial Bancorp's long position.The idea behind New York Community and Territorial Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Territorial Bancorp vs. China Communications Services | Territorial Bancorp vs. YATRA ONLINE DL 0001 | Territorial Bancorp vs. Liberty Broadband | Territorial Bancorp vs. Shenandoah Telecommunications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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