Correlation Between BCB Bancorp and Sea
Can any of the company-specific risk be diversified away by investing in both BCB Bancorp and Sea 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 BCB Bancorp and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCB Bancorp and Sea, you can compare the effects of market volatilities on BCB Bancorp and Sea 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 BCB Bancorp with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCB Bancorp and Sea.
Diversification Opportunities for BCB Bancorp and Sea
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCB and Sea is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and BCB Bancorp 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 BCB Bancorp are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of BCB Bancorp i.e., BCB Bancorp and Sea go up and down completely randomly.
Pair Corralation between BCB Bancorp and Sea
Given the investment horizon of 90 days BCB Bancorp is expected to generate 1.88 times less return on investment than Sea. But when comparing it to its historical volatility, BCB Bancorp is 1.52 times less risky than Sea. It trades about 0.25 of its potential returns per unit of risk. Sea is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 9,405 in Sea on September 1, 2024 and sell it today you would earn a total of 1,975 from holding Sea or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCB Bancorp vs. Sea
Performance |
| Timeline |
| BCB Bancorp |
| Sea |
BCB Bancorp and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCB Bancorp and Sea
The main advantage of trading using opposite BCB Bancorp and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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