Correlation Between Colony Bankcorp and Oak Valley
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Oak Valley 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 Oak Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Oak Valley Bancorp, you can compare the effects of market volatilities on Colony Bankcorp and Oak Valley 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 Oak Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Oak Valley.
Diversification Opportunities for Colony Bankcorp and Oak Valley
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Colony and Oak is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Oak Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Valley 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 Oak Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Valley Bancorp has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Oak Valley go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Oak Valley
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 0.85 times more return on investment than Oak Valley. However, Colony Bankcorp is 1.18 times less risky than Oak Valley. It trades about 0.14 of its potential returns per unit of risk. Oak Valley Bancorp is currently generating about 0.08 per unit of risk. If you would invest 1,105 in Colony Bankcorp on September 1, 2024 and sell it today you would earn a total of 652.00 from holding Colony Bankcorp or generate 59.0% 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. Oak Valley Bancorp
Performance |
| Timeline |
| Colony Bankcorp |
| Oak Valley Bancorp |
Colony Bankcorp and Oak Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Oak Valley
The main advantage of trading using opposite Colony Bankcorp and Oak Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Oak Valley 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 Oak Valley will offset losses from the drop in Oak Valley's long position.| Colony Bankcorp vs. Affinity Bancshares | Colony Bankcorp vs. Southern California Bancorp | Colony Bankcorp vs. Auburn National Bancorporation | Colony Bankcorp vs. BayCom Corp |
| Oak Valley vs. Affinity Bancshares | Oak Valley vs. Southern California Bancorp | Oak Valley vs. Auburn National Bancorporation | Oak Valley vs. BayCom Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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