Correlation Between Bancolombia and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both Bancolombia and LINKBANCORP 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 Bancolombia and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and LINKBANCORP, you can compare the effects of market volatilities on Bancolombia and LINKBANCORP 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 Bancolombia with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and LINKBANCORP.
Diversification Opportunities for Bancolombia and LINKBANCORP
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bancolombia and LINKBANCORP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Bancolombia 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 Bancolombia SA ADR are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Bancolombia i.e., Bancolombia and LINKBANCORP go up and down completely randomly.
Pair Corralation between Bancolombia and LINKBANCORP
Considering the 90-day investment horizon Bancolombia is expected to generate 16.32 times less return on investment than LINKBANCORP. But when comparing it to its historical volatility, Bancolombia SA ADR is 1.3 times less risky than LINKBANCORP. It trades about 0.02 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 634.00 in LINKBANCORP on September 12, 2024 and sell it today you would earn a total of 148.00 from holding LINKBANCORP or generate 23.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bancolombia SA ADR vs. LINKBANCORP
Performance |
| Timeline |
| Bancolombia SA ADR |
| LINKBANCORP |
Bancolombia and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bancolombia and LINKBANCORP
The main advantage of trading using opposite Bancolombia and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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