Correlation Between Columbia Banking and Independent Bank

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

By analyzing existing cross correlation between Columbia Banking System and Independent Bank Group, you can compare the effects of market volatilities on Columbia Banking and Independent Bank 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 Columbia Banking with a short position of Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Banking and Independent Bank.

Diversification Opportunities for Columbia Banking and Independent Bank

0.0

Correlation Coefficient

Columbia Banking  Independent Bank

Pay attention - limited upside

The 3 months correlation between Columbia and Independent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Banking System and Independent Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank and Columbia Banking 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 Columbia Banking System are associated (or correlated) with Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Columbia Banking i.e., Columbia Banking and Independent Bank go up and down completely randomly.

Pair Corralation between Columbia Banking and Independent Bank

If you would invest (100.00) in Independent Bank Group on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Independent Bank Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Columbia Banking System  vs.  Independent Bank Group

Columbia Banking System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Banking System has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Independent Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Independent Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Independent Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Banking and Independent Bank

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

The idea behind Columbia Banking System and Independent Bank Group 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.