Correlation Between OceanFirst Financial and First Mid

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

Diversification Opportunities for OceanFirst Financial and First Mid

-0.72

Correlation Coefficient

OceanFirst Financial  First Mid

Pay attention - limited upside

The 3 months correlation between OceanFirst and First is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp and First Mid Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mid Illinois 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 First Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mid Illinois has no effect on the direction of OceanFirst Financial i.e., OceanFirst Financial and First Mid go up and down completely randomly.

Pair Corralation between OceanFirst Financial and First Mid

Assuming the 90 days horizon OceanFirst Financial Corp is expected to generate 0.11 times more return on investment than First Mid. However, OceanFirst Financial Corp is 9.5 times less risky than First Mid. It trades about 0.09 of its potential returns per unit of risk. First Mid Illinois is currently generating about -0.11 per unit of risk. If you would invest  2,506  in OceanFirst Financial Corp on January 27, 2025 and sell it today you would earn a total of  31.00  from holding OceanFirst Financial Corp or generate 1.24% return on investment over 90 days.

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

OceanFirst Financial Corp  vs.  First Mid Illinois

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 7 (%) 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.

First Mid Illinois

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Mid Illinois has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with OceanFirst Financial and First Mid

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

The idea behind OceanFirst Financial Corp and First Mid Illinois 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.