Correlation Between Capital Bancorp and BayCom Corp

Can any of the company-specific risk be diversified away by investing in both Capital Bancorp 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 Capital Bancorp and BayCom Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Bancorp and BayCom Corp, you can compare the effects of market volatilities on Capital Bancorp 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 Capital Bancorp with a short position of BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Bancorp and BayCom Corp.

Diversification Opportunities for Capital Bancorp and BayCom Corp

0.94

Correlation Coefficient

Capital Bancorp  BayCom Corp

Almost no diversification

The 3 months correlation between Capital and BayCom is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Capital Bancorp and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Capital Bancorp 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 Capital 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 Capital Bancorp i.e., Capital Bancorp and BayCom Corp go up and down completely randomly.

Pair Corralation between Capital Bancorp and BayCom Corp

Given the investment horizon of 90 days Capital Bancorp is expected to generate 1.11 times less return on investment than BayCom Corp. In addition to that, Capital Bancorp is 1.23 times more volatile than BayCom Corp. It trades about 0.16 of its total potential returns per unit of risk. BayCom Corp is currently generating about 0.22 per unit of volatility. If you would invest  2,317  in BayCom Corp on September 13, 2024 and sell it today you would earn a total of  624.00  from holding BayCom Corp or generate 26.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Capital Bancorp  vs.  BayCom Corp

Capital Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Capital Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

BayCom Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BayCom Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, BayCom Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Bancorp and BayCom Corp

The main advantage of trading using opposite Capital Bancorp and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Bancorp 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.

The idea behind Capital Bancorp and BayCom Corp 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.