Correlation Between First Northwest and BayCom Corp
Can any of the company-specific risk be diversified away by investing in both First Northwest 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 First Northwest and BayCom Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northwest Bancorp and BayCom Corp, you can compare the effects of market volatilities on First Northwest 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 First Northwest with a short position of BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and BayCom Corp.
Diversification Opportunities for First Northwest and BayCom Corp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and BayCom is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and First Northwest 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 First Northwest 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 First Northwest i.e., First Northwest and BayCom Corp go up and down completely randomly.
Pair Corralation between First Northwest and BayCom Corp
Given the investment horizon of 90 days First Northwest is expected to generate 2.43 times less return on investment than BayCom Corp. In addition to that, First Northwest is 1.25 times more volatile than BayCom Corp. It trades about 0.09 of its total potential returns per unit of risk. BayCom Corp is currently generating about 0.27 per unit of volatility. If you would invest 2,372 in BayCom Corp on August 29, 2024 and sell it today you would earn a total of 599.00 from holding BayCom Corp or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. BayCom Corp
Performance |
| Timeline |
| First Northwest Bancorp |
| BayCom Corp |
First Northwest and BayCom Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and BayCom Corp
The main advantage of trading using opposite First Northwest and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest 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.| First Northwest vs. Home Federal Bancorp | First Northwest vs. First Financial Northwest | First Northwest vs. First Capital | First Northwest vs. Community West Bancshares |
| BayCom Corp vs. Home Federal Bancorp | BayCom Corp vs. LINKBANCORP | BayCom Corp vs. Community West Bancshares | BayCom Corp vs. First 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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