Correlation Between Affinity Bancshares and BayCom Corp
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and BayCom Corp 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 Affinity Bancshares and BayCom Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and BayCom Corp, you can compare the effects of market volatilities on Affinity Bancshares and BayCom Corp 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 Affinity Bancshares with a short position of BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and BayCom Corp.
Diversification Opportunities for Affinity Bancshares and BayCom Corp
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Affinity and BayCom is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with BayCom Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BayCom Corp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and BayCom Corp go up and down completely randomly.
Pair Corralation between Affinity Bancshares and BayCom Corp
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 16.37 times less return on investment than BayCom Corp. But when comparing it to its historical volatility, Affinity Bancshares is 3.06 times less risky than BayCom Corp. It trades about 0.06 of its potential returns per unit of risk. BayCom Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,473 in BayCom Corp on August 28, 2024 and sell it today you would earn a total of 467.00 from holding BayCom Corp or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Affinity Bancshares vs. BayCom Corp
Performance |
| Timeline |
| Affinity Bancshares |
| BayCom Corp |
Affinity Bancshares and BayCom Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and BayCom Corp
The main advantage of trading using opposite Affinity Bancshares and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, BayCom Corp 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 BayCom Corp will offset losses from the drop in BayCom Corp's long position.| Affinity Bancshares vs. Fifth Third Bancorp | Affinity Bancshares vs. Huntington Bancshares Incorporated | Affinity Bancshares vs. Comerica | Affinity Bancshares vs. MT Bank |
| BayCom Corp vs. Fifth Third Bancorp | BayCom Corp vs. Huntington Bancshares Incorporated | BayCom Corp vs. Comerica | BayCom Corp vs. MT Bank |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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