Correlation Between Dime Community and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Dime Community and Capitol Federal 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 Capitol Federal 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 Capitol Federal Financial, you can compare the effects of market volatilities on Dime Community and Capitol Federal 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 Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Capitol Federal.
Diversification Opportunities for Dime Community and Capitol Federal
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dime and Capitol is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial 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 Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Dime Community i.e., Dime Community and Capitol Federal go up and down completely randomly.
Pair Corralation between Dime Community and Capitol Federal
Given the investment horizon of 90 days Dime Community Bancshares is expected to generate 1.19 times more return on investment than Capitol Federal. However, Dime Community is 1.19 times more volatile than Capitol Federal Financial. It trades about 0.03 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about -0.07 per unit of risk. If you would invest 1,929 in Dime Community Bancshares on February 16, 2024 and sell it today you would earn a total of 47.00 from holding Dime Community Bancshares or generate 2.44% 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. Capitol Federal Financial
Performance |
Timeline |
Dime Community Bancshares |
Capitol Federal Financial |
Dime Community and Capitol Federal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dime Community and Capitol Federal
The main advantage of trading using opposite Dime Community and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.Dime Community vs. Chevron Corp | Dime Community vs. Exxon Mobil Corp | Dime Community vs. ATT Inc | Dime Community vs. Alcoa Corp |
Capitol Federal vs. Chevron Corp | Capitol Federal vs. Exxon Mobil Corp | Capitol Federal vs. ATT Inc | Capitol Federal vs. Alcoa Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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