Correlation Between Sea and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Sea and BCB Bancorp 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 Sea and BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and BCB Bancorp, you can compare the effects of market volatilities on Sea and BCB Bancorp 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 Sea with a short position of BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and BCB Bancorp.
Diversification Opportunities for Sea and BCB Bancorp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sea and BCB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sea and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp and Sea 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 Sea are associated (or correlated) with BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Sea i.e., Sea and BCB Bancorp go up and down completely randomly.
Pair Corralation between Sea and BCB Bancorp
Allowing for the 90-day total investment horizon Sea is expected to generate 1.52 times more return on investment than BCB Bancorp. However, Sea is 1.52 times more volatile than BCB Bancorp. It trades about 0.31 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.25 per unit of risk. If you would invest 9,405 in Sea on September 1, 2024 and sell it today you would earn a total of 1,975 from holding Sea or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. BCB Bancorp
Performance |
| Timeline |
| Sea |
| BCB Bancorp |
Sea and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and BCB Bancorp
The main advantage of trading using opposite Sea and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.The idea behind Sea and BCB Bancorp 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.| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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