Correlation Between Republic Bancorp and Colony Bankcorp
Can any of the company-specific risk be diversified away by investing in both Republic 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 Republic 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 Republic Bancorp and Colony Bankcorp, you can compare the effects of market volatilities on Republic 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 Republic Bancorp with a short position of Colony Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and Colony Bankcorp.
Diversification Opportunities for Republic Bancorp and Colony Bankcorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Republic and Colony is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp and Republic 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 Republic 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 Republic Bancorp i.e., Republic Bancorp and Colony Bankcorp go up and down completely randomly.
Pair Corralation between Republic Bancorp and Colony Bankcorp
Assuming the 90 days horizon Republic Bancorp is expected to generate 1.23 times more return on investment than Colony Bankcorp. However, Republic Bancorp is 1.23 times more volatile than Colony Bankcorp. It trades about 0.12 of its potential returns per unit of risk. Colony Bankcorp is currently generating about 0.12 per unit of risk. If you would invest 6,417 in Republic Bancorp on August 23, 2024 and sell it today you would earn a total of 1,184 from holding Republic Bancorp or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Republic Bancorp vs. Colony Bankcorp
Performance |
| Timeline |
| Republic Bancorp |
| Colony Bankcorp |
Republic Bancorp and Colony Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Republic Bancorp and Colony Bankcorp
The main advantage of trading using opposite Republic Bancorp and Colony Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic 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.| Republic Bancorp vs. First Community | Republic Bancorp vs. Community West Bancshares | Republic Bancorp vs. First Financial Northwest | Republic Bancorp vs. First Northwest 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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