Correlation Between Colony Bankcorp and Bank of San

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

By analyzing existing cross correlation between Colony Bankcorp and Bank of San, you can compare the effects of market volatilities on Colony Bankcorp and Bank of San 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 Bank of San. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Bank of San.

Diversification Opportunities for Colony Bankcorp and Bank of San

0.48

Correlation Coefficient

Colony Bankcorp  Bank of San

Very weak diversification

The 3 months correlation between Colony and Bank is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Bank of San in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of San 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 Bank of San. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of San has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Bank of San go up and down completely randomly.

Pair Corralation between Colony Bankcorp and Bank of San

Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.88 times more return on investment than Bank of San. However, Colony Bankcorp is 1.88 times more volatile than Bank of San. It trades about 0.06 of its potential returns per unit of risk. Bank of San is currently generating about 0.06 per unit of risk. If you would invest  1,238  in Colony Bankcorp on October 6, 2024 and sell it today you would earn a total of  344.00  from holding Colony Bankcorp or generate 27.79% return on investment over 90 days.

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

Colony Bankcorp  vs.  Bank of San

Colony Bankcorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colony Bankcorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Colony Bankcorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bank of San

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of San are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Bank of San may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Colony Bankcorp and Bank of San

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

The idea behind Colony Bankcorp and Bank of San 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.