Correlation Between Southern California and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Southern California and Bayfirst 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 Southern California and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and Bayfirst Financial Corp, you can compare the effects of market volatilities on Southern California and Bayfirst 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 Southern California with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Bayfirst Financial.
Diversification Opportunities for Southern California and Bayfirst Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southern and Bayfirst is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and Bayfirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayfirst Financial Corp and Southern California 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 Southern California Bancorp are associated (or correlated) with Bayfirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayfirst Financial Corp has no effect on the direction of Southern California i.e., Southern California and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Southern California and Bayfirst Financial
Given the investment horizon of 90 days Southern California Bancorp is expected to generate 1.19 times more return on investment than Bayfirst Financial. However, Southern California is 1.19 times more volatile than Bayfirst Financial Corp. It trades about 0.45 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about 0.04 per unit of risk. If you would invest 1,427 in Southern California Bancorp on August 27, 2024 and sell it today you would earn a total of 368.00 from holding Southern California Bancorp or generate 25.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. Bayfirst Financial Corp
Performance |
| Timeline |
| Southern California |
| Bayfirst Financial Corp |
Southern California and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Bayfirst Financial
The main advantage of trading using opposite Southern California and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Bayfirst 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 Bayfirst Financial will offset losses from the drop in Bayfirst Financial's long position.| Southern California vs. Fifth Third Bancorp | Southern California vs. Zions Bancorporation | Southern California vs. Huntington Bancshares Incorporated | Southern California vs. Comerica |
| Bayfirst Financial vs. Home Federal Bancorp | Bayfirst Financial vs. LINKBANCORP | Bayfirst Financial vs. Affinity Bancshares | Bayfirst Financial vs. BayCom Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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