Correlation Between Westamerica Bancorporation and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation 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 Westamerica Bancorporation and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Bayfirst Financial Corp, you can compare the effects of market volatilities on Westamerica Bancorporation 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 Westamerica Bancorporation with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Bayfirst Financial.
Diversification Opportunities for Westamerica Bancorporation and Bayfirst Financial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westamerica and Bayfirst is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. 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 Westamerica Bancorporation 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 Westamerica Bancorporation 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 Westamerica Bancorporation i.e., Westamerica Bancorporation and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Bayfirst Financial
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 0.79 times more return on investment than Bayfirst Financial. However, Westamerica Bancorporation is 1.26 times less risky than Bayfirst Financial. It trades about 0.02 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about 0.0 per unit of risk. If you would invest 5,419 in Westamerica Bancorporation on August 30, 2024 and sell it today you would earn a total of 335.00 from holding Westamerica Bancorporation or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Bayfirst Financial Corp
Performance |
| Timeline |
| Westamerica Bancorporation |
| Bayfirst Financial Corp |
Westamerica Bancorporation and Bayfirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Bayfirst Financial
The main advantage of trading using opposite Westamerica Bancorporation and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation 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.| Westamerica Bancorporation vs. SVB T Corp | Westamerica Bancorporation vs. First Capital | Westamerica Bancorporation vs. Pioneer Bankcorp | Westamerica Bancorporation vs. Liberty Northwest Bancorp |
| Bayfirst Financial vs. SVB T Corp | Bayfirst Financial vs. First Capital | Bayfirst Financial vs. Pioneer Bankcorp | Bayfirst Financial vs. Liberty 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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