Correlation Between Bayfirst Financial and First Bancorp
Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and First 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 Bayfirst Financial and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayfirst Financial Corp and First Bancorp, you can compare the effects of market volatilities on Bayfirst Financial and First 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 Bayfirst Financial with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and First Bancorp.
Diversification Opportunities for Bayfirst Financial and First Bancorp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayfirst and First is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Bayfirst Financial 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 Bayfirst Financial Corp are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and First Bancorp go up and down completely randomly.
Pair Corralation between Bayfirst Financial and First Bancorp
Given the investment horizon of 90 days Bayfirst Financial Corp is expected to under-perform the First Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Bayfirst Financial Corp is 1.16 times less risky than First Bancorp. The stock trades about 0.0 of its potential returns per unit of risk. The First Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,339 in First Bancorp on September 20, 2024 and sell it today you would earn a total of 396.00 from holding First Bancorp or generate 9.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bayfirst Financial Corp vs. First Bancorp
Performance |
Timeline |
Bayfirst Financial Corp |
First Bancorp |
Bayfirst Financial and First Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bayfirst Financial and First Bancorp
The main advantage of trading using opposite Bayfirst Financial and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, First 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 First Bancorp will offset losses from the drop in First Bancorp's long position.Bayfirst Financial vs. Home Federal Bancorp | Bayfirst Financial vs. LINKBANCORP | Bayfirst Financial vs. Affinity Bancshares | Bayfirst Financial vs. BayCom Corp |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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