Correlation Between Bayfirst Financial and First Financial
Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and First Financial 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 First Financial 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 First Financial Bancorp, you can compare the effects of market volatilities on Bayfirst Financial and First Financial 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and First Financial.
Diversification Opportunities for Bayfirst Financial and First Financial
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bayfirst and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and First Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bancorp has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and First Financial go up and down completely randomly.
Pair Corralation between Bayfirst Financial and First Financial
Given the investment horizon of 90 days Bayfirst Financial Corp is expected to generate 1.11 times more return on investment than First Financial. However, Bayfirst Financial is 1.11 times more volatile than First Financial Bancorp. It trades about 0.05 of its potential returns per unit of risk. First Financial Bancorp is currently generating about 0.04 per unit of risk. If you would invest 1,381 in Bayfirst Financial Corp on November 2, 2024 and sell it today you would earn a total of 149.00 from holding Bayfirst Financial Corp or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayfirst Financial Corp vs. First Financial Bancorp
Performance |
| Timeline |
| Bayfirst Financial Corp |
| First Financial Bancorp |
Bayfirst Financial and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayfirst Financial and First Financial
The main advantage of trading using opposite Bayfirst Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, First Financial 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 First Financial will offset losses from the drop in First Financial's long position.| Bayfirst Financial vs. Home Federal Bancorp | Bayfirst Financial vs. LINKBANCORP | Bayfirst Financial vs. Affinity Bancshares | Bayfirst Financial vs. BayCom Corp |
| First Financial vs. Home Bancorp | First Financial vs. Heritage Financial | First Financial vs. First Northwest Bancorp | First Financial vs. HomeTrust Bancshares |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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