Correlation Between Colony Bankcorp and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Heritage Financial 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 Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Heritage Financial, you can compare the effects of market volatilities on Colony Bankcorp and Heritage Financial 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 Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Heritage Financial.
Diversification Opportunities for Colony Bankcorp and Heritage Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Colony and Heritage is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial 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 Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Heritage Financial go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Heritage Financial
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.3 times more return on investment than Heritage Financial. However, Colony Bankcorp is 1.3 times more volatile than Heritage Financial. It trades about 0.24 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.0 per unit of risk. If you would invest 1,573 in Colony Bankcorp on November 18, 2024 and sell it today you would earn a total of 178.00 from holding Colony Bankcorp or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colony Bankcorp vs. Heritage Financial
Performance |
| Timeline |
| Colony Bankcorp |
| Heritage Financial |
Colony Bankcorp and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Heritage Financial
The main advantage of trading using opposite Colony Bankcorp and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Heritage Financial 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 Heritage Financial will offset losses from the drop in Heritage Financial'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 |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Independent Bank | Heritage Financial vs. Great Southern 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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