Correlation Between Colony Bankcorp and Mercantile Bank
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Mercantile 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 Colony Bankcorp and Mercantile Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Mercantile Bank, you can compare the effects of market volatilities on Colony Bankcorp and Mercantile 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 Colony Bankcorp with a short position of Mercantile Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Mercantile Bank.
Diversification Opportunities for Colony Bankcorp and Mercantile Bank
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Colony and Mercantile is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Mercantile Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercantile Bank 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 Mercantile Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercantile Bank has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Mercantile Bank go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Mercantile Bank
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 0.75 times more return on investment than Mercantile Bank. However, Colony Bankcorp is 1.33 times less risky than Mercantile Bank. It trades about 0.28 of its potential returns per unit of risk. Mercantile Bank is currently generating about 0.18 per unit of risk. If you would invest 1,480 in Colony Bankcorp on August 27, 2024 and sell it today you would earn a total of 277.00 from holding Colony Bankcorp or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colony Bankcorp vs. Mercantile Bank
Performance |
| Timeline |
| Colony Bankcorp |
| Mercantile Bank |
Colony Bankcorp and Mercantile Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Mercantile Bank
The main advantage of trading using opposite Colony Bankcorp and Mercantile Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Mercantile 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 Mercantile Bank will offset losses from the drop in Mercantile Bank'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 |
| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |