Correlation Between Mercantile Bank and Columbia Banking
Can any of the company-specific risk be diversified away by investing in both Mercantile Bank and Columbia Banking 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 Columbia Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercantile Bank and Columbia Banking System, you can compare the effects of market volatilities on Mercantile Bank and Columbia Banking 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 Columbia Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Bank and Columbia Banking.
Diversification Opportunities for Mercantile Bank and Columbia Banking
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercantile and Columbia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mercantile Bank and Columbia Banking System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Banking System 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 Columbia Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Banking System has no effect on the direction of Mercantile Bank i.e., Mercantile Bank and Columbia Banking go up and down completely randomly.
Pair Corralation between Mercantile Bank and Columbia Banking
Given the investment horizon of 90 days Mercantile Bank is expected to under-perform the Columbia Banking. In addition to that, Mercantile Bank is 1.06 times more volatile than Columbia Banking System. It trades about -0.08 of its total potential returns per unit of risk. Columbia Banking System is currently generating about 0.0 per unit of volatility. If you would invest 1,910 in Columbia Banking System on January 27, 2024 and sell it today you would lose (9.00) from holding Columbia Banking System or give up 0.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mercantile Bank vs. Columbia Banking System
Performance |
Timeline |
Mercantile Bank |
Columbia Banking System |
Mercantile Bank and Columbia Banking Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mercantile Bank and Columbia Banking
The main advantage of trading using opposite Mercantile Bank and Columbia Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Bank position performs unexpectedly, Columbia Banking 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 Columbia Banking will offset losses from the drop in Columbia Banking's long position.Mercantile Bank vs. Macatawa Bank | Mercantile Bank vs. Great Southern Bancorp | Mercantile Bank vs. First Bancorp | Mercantile Bank vs. MidWestOne Financial Group |
Columbia Banking vs. Glacier Bancorp | Columbia Banking vs. CVB Financial | Columbia Banking vs. Independent Bank Group | Columbia Banking vs. First Financial Bankshares |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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