Correlation Between Bayfirst Financial and Northeast Community

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

Diversification Opportunities for Bayfirst Financial and Northeast Community

-0.57

Correlation Coefficient

Bayfirst Financial  Northeast Community

Excellent diversification

The 3 months correlation between Bayfirst and Northeast is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and Northeast Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Community 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 Northeast Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Community has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Northeast Community go up and down completely randomly.

Pair Corralation between Bayfirst Financial and Northeast Community

Given the investment horizon of 90 days Bayfirst Financial Corp is expected to generate 1.83 times more return on investment than Northeast Community. However, Bayfirst Financial is 1.83 times more volatile than Northeast Community Bancorp. It trades about 0.34 of its potential returns per unit of risk. Northeast Community Bancorp is currently generating about -0.26 per unit of risk. If you would invest  1,586  in Bayfirst Financial Corp on December 5, 2024 and sell it today you would earn a total of  268.00  from holding Bayfirst Financial Corp or generate 16.9% return on investment over 90 days.

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

Bayfirst Financial Corp  vs.  Northeast Community 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 19 (%) 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.

Northeast Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northeast Community Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bayfirst Financial and Northeast Community

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

The idea behind Bayfirst Financial Corp and Northeast Community 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.