Correlation Between Luther Burbank and Bancolombia
Can any of the company-specific risk be diversified away by investing in both Luther Burbank and Bancolombia 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 Luther Burbank and Bancolombia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luther Burbank and Bancolombia SA ADR, you can compare the effects of market volatilities on Luther Burbank and Bancolombia 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 Luther Burbank with a short position of Bancolombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luther Burbank and Bancolombia.
Diversification Opportunities for Luther Burbank and Bancolombia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luther and Bancolombia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR and Luther Burbank 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 Luther Burbank are associated (or correlated) with Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of Luther Burbank i.e., Luther Burbank and Bancolombia go up and down completely randomly.
Pair Corralation between Luther Burbank and Bancolombia
If you would invest 3,105 in Bancolombia SA ADR on August 24, 2024 and sell it today you would earn a total of 171.00 from holding Bancolombia SA ADR or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Luther Burbank vs. Bancolombia SA ADR
Performance |
| Timeline |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bancolombia SA ADR |
Luther Burbank and Bancolombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luther Burbank and Bancolombia
The main advantage of trading using opposite Luther Burbank and Bancolombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank position performs unexpectedly, Bancolombia 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 Bancolombia will offset losses from the drop in Bancolombia's long position.| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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