Correlation Between Bayfirst Financial and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and Farmers Bank 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 Farmers Bank 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 The Farmers Bank, you can compare the effects of market volatilities on Bayfirst Financial and Farmers Bank 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 Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and Farmers Bank.
Diversification Opportunities for Bayfirst Financial and Farmers Bank
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayfirst and Farmers is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank 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 Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Farmers Bank go up and down completely randomly.
Pair Corralation between Bayfirst Financial and Farmers Bank
Given the investment horizon of 90 days Bayfirst Financial Corp is expected to under-perform the Farmers Bank. In addition to that, Bayfirst Financial is 2.01 times more volatile than The Farmers Bank. It trades about -0.07 of its total potential returns per unit of risk. The Farmers Bank is currently generating about -0.07 per unit of volatility. If you would invest 2,250 in The Farmers Bank on September 3, 2024 and sell it today you would lose (30.00) from holding The Farmers Bank or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayfirst Financial Corp vs. The Farmers Bank
Performance |
| Timeline |
| Bayfirst Financial Corp |
| Farmers Bank |
Bayfirst Financial and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayfirst Financial and Farmers Bank
The main advantage of trading using opposite Bayfirst Financial and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, Farmers Bank 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 Farmers Bank will offset losses from the drop in Farmers Bank's long position.| Bayfirst Financial vs. Home Federal Bancorp | Bayfirst Financial vs. LINKBANCORP | Bayfirst Financial vs. Affinity Bancshares | Bayfirst Financial vs. BayCom Corp |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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