Correlation Between Mercantile Bank and Colony Bankcorp
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank and Colony Bankcorp 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 Mercantile Bank and Colony Bankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and Colony Bankcorp, you can compare the effects of market volatilities on Mercantile Bank and Colony Bankcorp 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 Mercantile Bank with a short position of Colony Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and Colony Bankcorp.
Diversification Opportunities for Mercantile Bank and Colony Bankcorp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mercantile and Colony is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp and Mercantile Bank 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 Mercantile Bank are associated (or correlated) with Colony Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colony Bankcorp has no effect on the direction of Mercantile Bank i.e., Mercantile Bank and Colony Bankcorp go up and down completely randomly.
Pair Corralation between Mercantile Bank and Colony Bankcorp
Given the investment horizon of 90 days Mercantile Bank is expected to generate 1.13 times less return on investment than Colony Bankcorp. In addition to that, Mercantile Bank is 1.33 times more volatile than Colony Bankcorp. It trades about 0.18 of its total potential returns per unit of risk. Colony Bankcorp is currently generating about 0.28 per unit of volatility. If you would invest 1,480 in Colony Bankcorp on August 27, 2024 and sell it today you would earn a total of 277.00 from holding Colony Bankcorp or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercantile Bank vs. Colony Bankcorp
Performance |
| Timeline |
| Mercantile Bank |
| Colony Bankcorp |
Mercantile Bank and Colony Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Bank and Colony Bankcorp
The main advantage of trading using opposite Mercantile Bank and Colony Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank position performs unexpectedly, Colony Bankcorp 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 Colony Bankcorp will offset losses from the drop in Colony Bankcorp's long position.| Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group | Mercantile Bank vs. Lakeland Financial |
| Colony Bankcorp vs. Home Federal Bancorp | Colony Bankcorp vs. First Financial Northwest | Colony Bankcorp vs. First Northwest Bancorp | Colony Bankcorp vs. First Capital |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |