Correlation Between Colony Bankcorp and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Waterstone 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 Waterstone 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 Waterstone Financial, you can compare the effects of market volatilities on Colony Bankcorp and Waterstone 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Waterstone Financial.
Diversification Opportunities for Colony Bankcorp and Waterstone Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Colony and Waterstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Waterstone Financial go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Waterstone Financial
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.01 times less return on investment than Waterstone Financial. But when comparing it to its historical volatility, Colony Bankcorp is 1.07 times less risky than Waterstone Financial. It trades about 0.24 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,320 in Waterstone Financial on November 18, 2024 and sell it today you would earn a total of 150.00 from holding Waterstone Financial or generate 11.36% 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. Waterstone Financial
Performance |
| Timeline |
| Colony Bankcorp |
| Waterstone Financial |
Colony Bankcorp and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Waterstone Financial
The main advantage of trading using opposite Colony Bankcorp and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Waterstone 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 Waterstone Financial will offset losses from the drop in Waterstone 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 |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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