Correlation Between BayCom Corp and Southern California

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

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

Diversification Opportunities for BayCom Corp and Southern California

0.61

Correlation Coefficient

BayCom Corp  Southern California

Poor diversification

The 3 months correlation between BayCom and Southern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BayCom Corp and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California and BayCom Corp 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 BayCom Corp are associated (or correlated) with Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of BayCom Corp i.e., BayCom Corp and Southern California go up and down completely randomly.

Pair Corralation between BayCom Corp and Southern California

Given the investment horizon of 90 days BayCom Corp is expected to generate 1.3 times more return on investment than Southern California. However, BayCom Corp is 1.3 times more volatile than Southern California Bancorp. It trades about -0.02 of its potential returns per unit of risk. Southern California Bancorp is currently generating about -0.15 per unit of risk. If you would invest  2,654  in BayCom Corp on December 30, 2024 and sell it today you would lose (104.00) from holding BayCom Corp or give up 3.92% of portfolio value over 90 days.

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

BayCom Corp  vs.  Southern California Bancorp

BayCom Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BayCom Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, BayCom Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Southern California

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern California Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with BayCom Corp and Southern California

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

The idea behind BayCom Corp and Southern California 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.