Correlation Between National Bankshares and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both National Bankshares 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 National Bankshares and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Bayfirst Financial Corp, you can compare the effects of market volatilities on National Bankshares 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 National Bankshares with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Bayfirst Financial.
Diversification Opportunities for National Bankshares and Bayfirst Financial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Bayfirst is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares 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 National Bankshares 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 National Bankshares 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 National Bankshares i.e., National Bankshares and Bayfirst Financial go up and down completely randomly.
Pair Corralation between National Bankshares and Bayfirst Financial
Given the investment horizon of 90 days National Bankshares is expected to generate 18.59 times less return on investment than Bayfirst Financial. In addition to that, National Bankshares is 1.52 times more volatile than Bayfirst Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Bayfirst Financial Corp is currently generating about 0.12 per unit of volatility. If you would invest 1,330 in Bayfirst Financial Corp on October 24, 2024 and sell it today you would earn a total of 45.00 from holding Bayfirst Financial Corp or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. Bayfirst Financial Corp
Performance |
| Timeline |
| National Bankshares |
| Bayfirst Financial Corp |
National Bankshares and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and Bayfirst Financial
The main advantage of trading using opposite National Bankshares and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares 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.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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