Correlation Between OceanFirst Financial and Kentucky First

Can any of the company-specific risk be diversified away by investing in both OceanFirst Financial and Kentucky First 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 Kentucky First 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 Kentucky First Federal, you can compare the effects of market volatilities on OceanFirst Financial and Kentucky First 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 Kentucky First. Check out your portfolio center. Please also check ongoing floating volatility patterns of OceanFirst Financial and Kentucky First.

Diversification Opportunities for OceanFirst Financial and Kentucky First

-0.5

Correlation Coefficient

OceanFirst Financial  Kentucky First

Very good diversification

The 3 months correlation between OceanFirst and Kentucky is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Kentucky First Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky First Federal 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 Kentucky First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky First Federal has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Kentucky First go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Kentucky First

Assuming the 90 days horizon OceanFirst Financial Corp is expected to under-perform the Kentucky First. But the preferred stock apears to be less risky and, when comparing its historical volatility, OceanFirst Financial Corp is 11.8 times less risky than Kentucky First. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Kentucky First Federal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Kentucky First Federal on September 22, 2024 and sell it today you would earn a total of  28.00  from holding Kentucky First Federal or generate 10.85% return on investment over 90 days.

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

OceanFirst Financial Corp  vs.  Kentucky First Federal

OceanFirst Financial Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 5 (%) 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.

Kentucky First Federal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kentucky First Federal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Kentucky First sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OceanFirst Financial and Kentucky First

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

The idea behind OceanFirst Financial Corp and Kentucky First Federal 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.