Correlation Between Colony Bankcorp and Republic Bancorp
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Republic 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 Colony Bankcorp and Republic Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Republic Bancorp, you can compare the effects of market volatilities on Colony Bankcorp and Republic 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 Colony Bankcorp with a short position of Republic Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Republic Bancorp.
Diversification Opportunities for Colony Bankcorp and Republic Bancorp
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Colony and Republic is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp 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 Republic Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Bancorp has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Republic Bancorp go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Republic Bancorp
Given the investment horizon of 90 days Colony Bankcorp is expected to under-perform the Republic Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Colony Bankcorp is 1.32 times less risky than Republic Bancorp. The stock trades about -0.36 of its potential returns per unit of risk. The Republic Bancorp is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 7,738 in Republic Bancorp on September 24, 2024 and sell it today you would lose (652.00) from holding Republic Bancorp or give up 8.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Colony Bankcorp vs. Republic Bancorp
Performance |
Timeline |
Colony Bankcorp |
Republic Bancorp |
Colony Bankcorp and Republic Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Colony Bankcorp and Republic Bancorp
The main advantage of trading using opposite Colony Bankcorp and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Republic 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 Republic Bancorp will offset losses from the drop in Republic Bancorp's long position.Colony Bankcorp vs. Home Federal Bancorp | Colony Bankcorp vs. First Financial Northwest | Colony Bankcorp vs. First Northwest Bancorp | Colony Bankcorp vs. First Capital |
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Check out your portfolio center.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.
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