Correlation Between Dow Jones and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Bayfirst Financial Corp, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Bayfirst Financial.
Diversification Opportunities for Dow Jones and Bayfirst Financial
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Bayfirst is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Dow Jones and Bayfirst Financial
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Bayfirst Financial. However, Dow Jones Industrial is 3.32 times less risky than Bayfirst Financial. It trades about 0.09 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about -0.01 per unit of risk. If you would invest 3,351,765 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,139,300 from holding Dow Jones Industrial or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Dow Jones Industrial vs. Bayfirst Financial Corp
Performance |
| Timeline |
Dow Jones and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Bayfirst Financial Corp
Pair trading matchups for Bayfirst Financial
Pair Trading with Dow Jones and Bayfirst Financial
The main advantage of trading using opposite Dow Jones and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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