Correlation Between Bayfirst Financial and Magyar Bancorp

Can any of the company-specific risk be diversified away by investing in both Bayfirst Financial and Magyar 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 Magyar 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 Magyar Bancorp, you can compare the effects of market volatilities on Bayfirst Financial and Magyar 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 Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayfirst Financial and Magyar Bancorp.

Diversification Opportunities for Bayfirst Financial and Magyar Bancorp

0.32

Correlation Coefficient

Bayfirst Financial  Magyar Bancorp

Weak diversification

The 3 months correlation between Bayfirst and Magyar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Magyar Bancorp go up and down completely randomly.

Pair Corralation between Bayfirst Financial and Magyar Bancorp

Given the investment horizon of 90 days Bayfirst Financial Corp is expected to generate 1.92 times more return on investment than Magyar Bancorp. However, Bayfirst Financial is 1.92 times more volatile than Magyar Bancorp. It trades about 0.21 of its potential returns per unit of risk. Magyar Bancorp is currently generating about -0.01 per unit of risk. If you would invest  1,335  in Bayfirst Financial Corp on December 20, 2024 and sell it today you would earn a total of  533.00  from holding Bayfirst Financial Corp or generate 39.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Bayfirst Financial Corp  vs.  Magyar Bancorp

Bayfirst Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bayfirst Financial Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Bayfirst Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Magyar Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magyar Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Magyar Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bayfirst Financial and Magyar Bancorp

The main advantage of trading using opposite Bayfirst Financial and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayfirst Financial position performs unexpectedly, Magyar 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp's long position.

The idea behind Bayfirst Financial Corp and Magyar 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.