Correlation Between Lakeland Bancorp and Dime Community

Can any of the company-specific risk be diversified away by investing in both Lakeland Bancorp 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 Lakeland Bancorp and Dime Community into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lakeland Bancorp and Dime Community Bancshares, you can compare the effects of market volatilities on Lakeland Bancorp 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 Lakeland Bancorp with a short position of Dime Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Bancorp and Dime Community.

Diversification Opportunities for Lakeland Bancorp and Dime Community

0.31

Correlation Coefficient

Lakeland Bancorp  Dime Community

Weak diversification

The 3 months correlation between Lakeland and Dime is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Bancorp 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 Lakeland Bancorp 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 Lakeland Bancorp 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 Lakeland Bancorp i.e., Lakeland Bancorp and Dime Community go up and down completely randomly.

Pair Corralation between Lakeland Bancorp and Dime Community

If you would invest  2,566  in Dime Community Bancshares on September 4, 2024 and sell it today you would earn a total of  1,070  from holding Dime Community Bancshares or generate 41.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Lakeland Bancorp  vs.  Dime Community Bancshares

Lakeland Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lakeland Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Lakeland Bancorp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Dime Community Bancshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dime Community Bancshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dime Community displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lakeland Bancorp and Dime Community

The main advantage of trading using opposite Lakeland Bancorp and Dime Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Bancorp 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 Lakeland Bancorp 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.