Correlation Between Colony Bankcorp and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Texas Capital 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 Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Texas Capital Bancshares, you can compare the effects of market volatilities on Colony Bankcorp and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Texas Capital.
Diversification Opportunities for Colony Bankcorp and Texas Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Colony and Texas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Texas Capital go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Texas Capital
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.2 times more return on investment than Texas Capital. However, Colony Bankcorp is 1.2 times more volatile than Texas Capital Bancshares. It trades about 0.15 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.09 per unit of risk. If you would invest 1,582 in Colony Bankcorp on November 2, 2024 and sell it today you would earn a total of 109.00 from holding Colony Bankcorp or generate 6.89% 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. Texas Capital Bancshares
Performance |
| Timeline |
| Colony Bankcorp |
| Texas Capital Bancshares |
Colony Bankcorp and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Texas Capital
The main advantage of trading using opposite Colony Bankcorp and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital'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 |
| Texas Capital vs. Heartland Financial USA | Texas Capital vs. Heritage Commerce Corp | Texas Capital vs. Business First Bancshares | Texas Capital vs. German American 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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