Correlation Between Columbia Banking and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Columbia Banking and Independent Bank 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 Columbia Banking and Independent Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Banking System and Independent Bank Group, you can compare the effects of market volatilities on Columbia Banking and Independent Bank 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 Columbia Banking with a short position of Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Banking and Independent Bank.
Diversification Opportunities for Columbia Banking and Independent Bank
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Columbia and Independent is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Banking System and Independent Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank and Columbia Banking 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 Columbia Banking System are associated (or correlated) with Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Columbia Banking i.e., Columbia Banking and Independent Bank go up and down completely randomly.
Pair Corralation between Columbia Banking and Independent Bank
Given the investment horizon of 90 days Columbia Banking is expected to generate 1.18 times less return on investment than Independent Bank. In addition to that, Columbia Banking is 1.11 times more volatile than Independent Bank Group. It trades about 0.07 of its total potential returns per unit of risk. Independent Bank Group is currently generating about 0.09 per unit of volatility. If you would invest 3,397 in Independent Bank Group on August 28, 2024 and sell it today you would earn a total of 3,334 from holding Independent Bank Group or generate 98.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Banking System vs. Independent Bank Group
Performance |
| Timeline |
| Columbia Banking System |
| Independent Bank |
Columbia Banking and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Banking and Independent Bank
The main advantage of trading using opposite Columbia Banking and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Banking position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank's long position.| Columbia Banking vs. Glacier Bancorp | Columbia Banking vs. CVB Financial | Columbia Banking vs. Independent Bank Group | Columbia Banking vs. First Financial Bankshares |
| Independent Bank vs. Heritage Financial | Independent Bank vs. ConnectOne Bancorp | Independent Bank vs. Home Bancorp | Independent Bank vs. National Bank Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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