Correlation Between Columbia Banking and Victory Bancorp

Can any of the company-specific risk be diversified away by investing in both Columbia Banking and Victory Bancorp 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 Columbia Banking and Victory Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Banking System and The Victory Bancorp, you can compare the effects of market volatilities on Columbia Banking and Victory Bancorp 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 Columbia Banking with a short position of Victory Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Banking and Victory Bancorp.

Diversification Opportunities for Columbia Banking and Victory Bancorp

0.24

Correlation Coefficient

Columbia Banking  Victory Bancorp

Modest diversification

The 3 months correlation between Columbia and Victory is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Banking System and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Bancorp and Columbia Banking 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 Columbia Banking System are associated (or correlated) with Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of Columbia Banking i.e., Columbia Banking and Victory Bancorp go up and down completely randomly.

Pair Corralation between Columbia Banking and Victory Bancorp

Given the investment horizon of 90 days Columbia Banking System is expected to under-perform the Victory Bancorp. In addition to that, Columbia Banking is 1.42 times more volatile than The Victory Bancorp. It trades about -0.02 of its total potential returns per unit of risk. The Victory Bancorp is currently generating about -0.02 per unit of volatility. If you would invest  1,298  in The Victory Bancorp on January 18, 2024 and sell it today you would lose (287.00) from holding The Victory Bancorp or give up 22.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.37%
Values	Daily Returns

Columbia Banking System  vs.  The Victory Bancorp

Columbia Banking System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Banking System has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Victory Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Columbia Banking and Victory Bancorp

The main advantage of trading using opposite Columbia Banking and Victory Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Banking position performs unexpectedly, Victory Bancorp 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 Victory Bancorp will offset losses from the drop in Victory Bancorp's long position.

The idea behind Columbia Banking System and The Victory Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.