Correlation Between Colony Bankcorp and Northfield Bancorp
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Northfield 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 Northfield 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 Northfield Bancorp, you can compare the effects of market volatilities on Colony Bankcorp and Northfield 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 Northfield Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Northfield Bancorp.
Diversification Opportunities for Colony Bankcorp and Northfield Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Colony and Northfield is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Northfield Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northfield 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 Northfield Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northfield Bancorp has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Northfield Bancorp go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Northfield Bancorp
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 0.74 times more return on investment than Northfield Bancorp. However, Colony Bankcorp is 1.35 times less risky than Northfield Bancorp. It trades about 0.28 of its potential returns per unit of risk. Northfield Bancorp is currently generating about 0.2 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. Northfield Bancorp
Performance |
| Timeline |
| Colony Bankcorp |
| Northfield Bancorp |
Colony Bankcorp and Northfield Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Northfield Bancorp
The main advantage of trading using opposite Colony Bankcorp and Northfield Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Northfield 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 Northfield Bancorp will offset losses from the drop in Northfield 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 |
| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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