Correlation Between Bayfirst Financial and Cambridge Bancorp
Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and Cambridge 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 Bayfirst Financial and Cambridge Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayfirst Financial Corp and Cambridge Bancorp, you can compare the effects of market volatilities on Bayfirst Financial and Cambridge 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 Bayfirst Financial with a short position of Cambridge Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and Cambridge Bancorp.
Diversification Opportunities for Bayfirst Financial and Cambridge Bancorp
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bayfirst and Cambridge is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and Cambridge Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Bancorp and Bayfirst Financial 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 Bayfirst Financial Corp are associated (or correlated) with Cambridge Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Bancorp has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Cambridge Bancorp go up and down completely randomly.
Pair Corralation between Bayfirst Financial and Cambridge Bancorp
Given the investment horizon of 90 days Bayfirst Financial Corp is expected to under-perform the Cambridge Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Bayfirst Financial Corp is 1.2 times less risky than Cambridge Bancorp. The stock trades about 0.0 of its potential returns per unit of risk. The Cambridge Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8,087 in Cambridge Bancorp on August 30, 2024 and sell it today you would lose (728.00) from holding Cambridge Bancorp or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.44% |
| Values | Daily Returns |
Bayfirst Financial Corp vs. Cambridge Bancorp
Performance |
| Timeline |
| Bayfirst Financial Corp |
| Cambridge Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bayfirst Financial and Cambridge Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayfirst Financial and Cambridge Bancorp
The main advantage of trading using opposite Bayfirst Financial and Cambridge Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, Cambridge 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 Cambridge Bancorp will offset losses from the drop in Cambridge Bancorp's long position.| Bayfirst Financial vs. SVB T Corp | Bayfirst Financial vs. First Capital | Bayfirst Financial vs. Pioneer Bankcorp | Bayfirst Financial vs. Liberty Northwest Bancorp |
| Cambridge Bancorp vs. First Community | Cambridge Bancorp vs. Community West Bancshares | Cambridge Bancorp vs. First Financial Northwest | Cambridge Bancorp vs. First Northwest Bancorp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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