Correlation Between Northfield Bancorp and Colony Bankcorp
Can any of the company-specific risk be diversified away by investing in both Northfield Bancorp 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 Northfield Bancorp and Colony Bankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northfield Bancorp and Colony Bankcorp, you can compare the effects of market volatilities on Northfield Bancorp 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 Northfield Bancorp with a short position of Colony Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and Colony Bankcorp.
Diversification Opportunities for Northfield Bancorp and Colony Bankcorp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northfield and Colony is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Northfield Bancorp and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp and Northfield Bancorp 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 Northfield Bancorp 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 Northfield Bancorp i.e., Northfield Bancorp and Colony Bankcorp go up and down completely randomly.
Pair Corralation between Northfield Bancorp and Colony Bankcorp
Given the investment horizon of 90 days Northfield Bancorp is expected to under-perform the Colony Bankcorp. In addition to that, Northfield Bancorp is 1.29 times more volatile than Colony Bankcorp. It trades about 0.0 of its total potential returns per unit of risk. Colony Bankcorp is currently generating about 0.04 per unit of volatility. If you would invest 1,222 in Colony Bankcorp on November 2, 2024 and sell it today you would earn a total of 460.50 from holding Colony Bankcorp or generate 37.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northfield Bancorp vs. Colony Bankcorp
Performance |
| Timeline |
| Northfield Bancorp |
| Colony Bankcorp |
Northfield Bancorp and Colony Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northfield Bancorp and Colony Bankcorp
The main advantage of trading using opposite Northfield Bancorp and Colony Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield Bancorp 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.| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home Bancorp |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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