Correlation Between Peapack Gladstone and Lakeland Bancorp

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

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

Diversification Opportunities for Peapack Gladstone and Lakeland Bancorp

0.34

Correlation Coefficient

Peapack Gladstone  Lakeland Bancorp

Weak diversification

The 3 months correlation between Peapack and Lakeland is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and Lakeland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Bancorp and Peapack Gladstone 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 Peapack Gladstone Financial are associated (or correlated) with Lakeland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Bancorp has no effect on the direction of Peapack Gladstone i.e., Peapack Gladstone and Lakeland Bancorp go up and down completely randomly.

Pair Corralation between Peapack Gladstone and Lakeland Bancorp

If you would invest  2,723  in Peapack Gladstone Financial on September 4, 2024 and sell it today you would earn a total of  911.00  from holding Peapack Gladstone Financial or generate 33.46% return on investment over 90 days.

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

Peapack Gladstone Financial  vs.  Lakeland Bancorp

Peapack Gladstone

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peapack Gladstone Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Peapack Gladstone exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Peapack Gladstone and Lakeland Bancorp

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

The idea behind Peapack Gladstone Financial and Lakeland 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.