Correlation Between Colony Bankcorp and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and ECB 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 ECB 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 ECB Bancorp, you can compare the effects of market volatilities on Colony Bankcorp and ECB 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 ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and ECB Bancorp.
Diversification Opportunities for Colony Bankcorp and ECB Bancorp
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Colony and ECB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and ECB Bancorp go up and down completely randomly.
Pair Corralation between Colony Bankcorp and ECB Bancorp
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 0.67 times more return on investment than ECB Bancorp. However, Colony Bankcorp is 1.5 times less risky than ECB Bancorp. It trades about 0.08 of its potential returns per unit of risk. ECB Bancorp is currently generating about 0.0 per unit of risk. If you would invest 1,694 in Colony Bankcorp on September 18, 2024 and sell it today you would earn a total of 23.00 from holding Colony Bankcorp or generate 1.36% 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. ECB Bancorp
Performance |
| Timeline |
| Colony Bankcorp |
| ECB Bancorp |
Colony Bankcorp and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and ECB Bancorp
The main advantage of trading using opposite Colony Bankcorp and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, ECB 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 ECB Bancorp will offset losses from the drop in ECB 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 |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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