Correlation Between OceanFirst Financial and Temecula Valley

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

Diversification Opportunities for OceanFirst Financial and Temecula Valley

0.0

Correlation Coefficient

OceanFirst Financial  Temecula Valley

Pay attention - limited upside

The 3 months correlation between OceanFirst and Temecula is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and Temecula Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Temecula Valley 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 Temecula Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Temecula Valley Bancorp has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and Temecula Valley go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Temecula Valley

If you would invest  2,482  in OceanFirst Financial Corp on December 30, 2024 and sell it today you would earn a total of  48.00  from holding OceanFirst Financial Corp or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

OceanFirst Financial Corp  vs.  Temecula Valley Bancorp

OceanFirst Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 10 (%) 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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Temecula Valley Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Temecula Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Temecula Valley is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with OceanFirst Financial and Temecula Valley

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

The idea behind OceanFirst Financial Corp and Temecula Valley 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.