Correlation Between Colony Bankcorp and Blue Ridge

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

By analyzing existing cross correlation between Colony Bankcorp and Blue Ridge Bankshares, you can compare the effects of market volatilities on Colony Bankcorp and Blue Ridge 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 Colony Bankcorp with a short position of Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Blue Ridge.

Diversification Opportunities for Colony Bankcorp and Blue Ridge

0.68

Correlation Coefficient

Colony Bankcorp  Blue Ridge

Poor diversification

The 3 months correlation between Colony and Blue is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Blue Ridge Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Bankshares and Colony Bankcorp 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 Colony Bankcorp are associated (or correlated) with Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Bankshares has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Blue Ridge go up and down completely randomly.

Pair Corralation between Colony Bankcorp and Blue Ridge

Given the investment horizon of 90 days Colony Bankcorp is expected to generate 0.44 times more return on investment than Blue Ridge. However, Colony Bankcorp is 2.27 times less risky than Blue Ridge. It trades about 0.05 of its potential returns per unit of risk. Blue Ridge Bankshares is currently generating about -0.03 per unit of risk. If you would invest  1,155  in Colony Bankcorp on November 20, 2024 and sell it today you would earn a total of  596.00  from holding Colony Bankcorp or generate 51.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Colony Bankcorp  vs.  Blue Ridge Bankshares

Colony Bankcorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colony Bankcorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Colony Bankcorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Blue Ridge Bankshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Ridge Bankshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Blue Ridge may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Colony Bankcorp and Blue Ridge

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

The idea behind Colony Bankcorp and Blue Ridge Bankshares 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.