Correlation Between Dime Community and Farmers
Can any of the company-specific risk be diversified away by investing in both Dime Community and Farmers 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 Dime Community and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dime Community Bancshares and Farmers and Merchants, you can compare the effects of market volatilities on Dime Community and Farmers 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 Dime Community with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Farmers.
Diversification Opportunities for Dime Community and Farmers
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dime and Farmers is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Farmers and Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers and Merchants and Dime Community 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 Dime Community Bancshares are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers and Merchants has no effect on the direction of Dime Community i.e., Dime Community and Farmers go up and down completely randomly.
Pair Corralation between Dime Community and Farmers
Given the investment horizon of 90 days Dime Community Bancshares is expected to generate 1.83 times more return on investment than Farmers. However, Dime Community is 1.83 times more volatile than Farmers and Merchants. It trades about 0.11 of its potential returns per unit of risk. Farmers and Merchants is currently generating about -0.16 per unit of risk. If you would invest 1,832 in Dime Community Bancshares on January 25, 2024 and sell it today you would earn a total of 111.00 from holding Dime Community Bancshares or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. Farmers and Merchants
Performance |
| Timeline |
| Dime Community Bancshares |
| Farmers and Merchants |
Dime Community and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Farmers
The main advantage of trading using opposite Dime Community and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' long position.| Dime Community vs. Peapack Gladstone Financial | Dime Community vs. Northfield Bancorp | Dime Community vs. Great Southern Bancorp | Dime Community vs. Heritage Financial |
| Farmers vs. Bank Rakyat | Farmers vs. Lloyds Banking Group | Farmers vs. Western Alliance Bancorporation | Farmers vs. JAPAN POST 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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