Correlation Between Cambridge Bancorp and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Cambridge Bancorp 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 Cambridge Bancorp and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambridge Bancorp and Bayfirst Financial Corp, you can compare the effects of market volatilities on Cambridge Bancorp 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 Cambridge Bancorp with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Bancorp and Bayfirst Financial.
Diversification Opportunities for Cambridge Bancorp and Bayfirst Financial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cambridge and Bayfirst is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge 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 Cambridge 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 Cambridge 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 Cambridge Bancorp i.e., Cambridge Bancorp and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Cambridge Bancorp and Bayfirst Financial
Given the investment horizon of 90 days Cambridge Bancorp is expected to generate 1.2 times more return on investment than Bayfirst Financial. However, Cambridge Bancorp is 1.2 times more volatile than Bayfirst Financial Corp. It trades about 0.01 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about 0.0 per unit of risk. If you would invest 8,087 in Cambridge Bancorp on August 30, 2024 and sell it today you would lose (728.00) from holding Cambridge Bancorp or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.44% |
| Values | Daily Returns |
Cambridge Bancorp vs. Bayfirst Financial Corp
Performance |
| Timeline |
| Cambridge Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bayfirst Financial Corp |
Cambridge Bancorp and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambridge Bancorp and Bayfirst Financial
The main advantage of trading using opposite Cambridge Bancorp and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambridge Bancorp 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.| Cambridge Bancorp vs. First Community | Cambridge Bancorp vs. Community West Bancshares | Cambridge Bancorp vs. First Financial Northwest | Cambridge Bancorp vs. First Northwest Bancorp |
| Bayfirst Financial vs. SVB T Corp | Bayfirst Financial vs. First Capital | Bayfirst Financial vs. Pioneer Bankcorp | Bayfirst Financial vs. Liberty Northwest 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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