Correlation Between Bayfirst Financial and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and Heritage Commerce 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 Heritage Commerce 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 Heritage Commerce Corp, you can compare the effects of market volatilities on Bayfirst Financial and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and Heritage Commerce.
Diversification Opportunities for Bayfirst Financial and Heritage Commerce
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bayfirst and Heritage is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Heritage Commerce go up and down completely randomly.
Pair Corralation between Bayfirst Financial and Heritage Commerce
Given the investment horizon of 90 days Bayfirst Financial Corp is expected to generate 2.57 times more return on investment than Heritage Commerce. However, Bayfirst Financial is 2.57 times more volatile than Heritage Commerce Corp. It trades about 0.29 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.52 per unit of risk. If you would invest 1,375 in Bayfirst Financial Corp on November 18, 2024 and sell it today you would earn a total of 325.00 from holding Bayfirst Financial Corp or generate 23.64% 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. Heritage Commerce Corp
Performance |
| Timeline |
| Bayfirst Financial Corp |
| Heritage Commerce Corp |
Bayfirst Financial and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayfirst Financial and Heritage Commerce
The main advantage of trading using opposite Bayfirst Financial and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce's long position.| Bayfirst Financial vs. Home Federal Bancorp | Bayfirst Financial vs. LINKBANCORP | Bayfirst Financial vs. Affinity Bancshares | Bayfirst Financial vs. BayCom Corp |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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