Correlation Between Southern California and BayCom Corp
Can any of the company-specific risk be diversified away by investing in both Southern California and BayCom Corp 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 BayCom Corp 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 BayCom Corp, you can compare the effects of market volatilities on Southern California and BayCom Corp 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 BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and BayCom Corp.
Diversification Opportunities for Southern California and BayCom Corp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and BayCom is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom 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 BayCom Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BayCom Corp has no effect on the direction of Southern California i.e., Southern California and BayCom Corp go up and down completely randomly.
Pair Corralation between Southern California and BayCom Corp
Given the investment horizon of 90 days Southern California is expected to generate 3.87 times less return on investment than BayCom Corp. But when comparing it to its historical volatility, Southern California Bancorp is 1.34 times less risky than BayCom Corp. It trades about 0.04 of its potential returns per unit of risk. BayCom Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,002 in BayCom Corp on August 28, 2024 and sell it today you would earn a total of 938.00 from holding BayCom Corp or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. BayCom Corp
Performance |
| Timeline |
| Southern California |
| BayCom Corp |
Southern California and BayCom Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and BayCom Corp
The main advantage of trading using opposite Southern California and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, BayCom Corp 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 BayCom Corp will offset losses from the drop in BayCom Corp's long position.| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
| BayCom Corp vs. Fifth Third Bancorp | BayCom Corp vs. Zions Bancorporation | BayCom Corp vs. Huntington Bancshares Incorporated | BayCom Corp vs. Comerica |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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