Correlation Between OceanFirst Financial and Fidelity

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

By analyzing existing cross correlation between OceanFirst Financial Corp and Fidelity DD Bancorp, you can compare the effects of market volatilities on OceanFirst Financial and Fidelity 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 OceanFirst Financial with a short position of Fidelity. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Fidelity.

Diversification Opportunities for OceanFirst Financial and Fidelity

0.45

Correlation Coefficient

OceanFirst Financial  Fidelity

Very weak diversification

The 3 months correlation between OceanFirst and Fidelity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Fidelity DD Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity DD Bancorp and OceanFirst Financial 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 OceanFirst Financial Corp are associated (or correlated) with Fidelity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity DD Bancorp has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Fidelity go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Fidelity

Assuming the 90 days horizon OceanFirst Financial is expected to generate 1.43 times less return on investment than Fidelity. But when comparing it to its historical volatility, OceanFirst Financial Corp is 1.17 times less risky than Fidelity. It trades about 0.02 of its potential returns per unit of risk. Fidelity DD Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,418  in Fidelity DD Bancorp on September 3, 2024 and sell it today you would earn a total of  952.00  from holding Fidelity DD Bancorp or generate 21.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

OceanFirst Financial Corp  vs.  Fidelity DD Bancorp

OceanFirst Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, OceanFirst Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity DD Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity DD Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Fidelity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OceanFirst Financial and Fidelity

The main advantage of trading using opposite OceanFirst Financial and Fidelity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial position performs unexpectedly, Fidelity 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 Fidelity will offset losses from the drop in Fidelity's long position.

The idea behind OceanFirst Financial Corp and Fidelity DD 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.