Correlation Between Ford and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bayfirst Financial Corp, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bayfirst Financial.
Diversification Opportunities for Ford and Bayfirst Financial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Bayfirst is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Ford and Bayfirst Financial
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.97 times more return on investment than Bayfirst Financial. However, Ford Motor is 1.03 times less risky than Bayfirst Financial. It trades about 0.01 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 1,073 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Ford Motor or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ford Motor vs. Bayfirst Financial Corp
Performance |
| Timeline |
| Ford Motor |
| Bayfirst Financial Corp |
Ford and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Bayfirst Financial
The main advantage of trading using opposite Ford and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Bayfirst Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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