Correlation Between Nio and Dime Community
Can any of the company-specific risk be diversified away by investing in both Nio and Dime Community 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 Nio and Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Dime Community Bancshares, you can compare the effects of market volatilities on Nio and Dime Community 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 Nio with a short position of Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Dime Community.
Diversification Opportunities for Nio and Dime Community
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nio and Dime is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Dime Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dime Community Bancshares and Nio 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 Nio Class A are associated (or correlated) with Dime Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dime Community Bancshares has no effect on the direction of Nio i.e., Nio and Dime Community go up and down completely randomly.
Pair Corralation between Nio and Dime Community
Considering the 90-day investment horizon Nio Class A is expected to under-perform the Dime Community. In addition to that, Nio is 1.36 times more volatile than Dime Community Bancshares. It trades about -0.2 of its total potential returns per unit of risk. Dime Community Bancshares is currently generating about 0.11 per unit of volatility. 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 Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nio Class A vs. Dime Community Bancshares
Performance |
Timeline |
Nio Class A |
Dime Community Bancshares |
Nio and Dime Community Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nio and Dime Community
The main advantage of trading using opposite Nio and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, Dime Community 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 Dime Community will offset losses from the drop in Dime Community's long position.The idea behind Nio Class A and Dime Community Bancshares 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.Dime Community vs. Peapack Gladstone Financial | Dime Community vs. Northfield Bancorp | Dime Community vs. Great Southern Bancorp | Dime Community 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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