Correlation Between BayCom Corp and Capital Bancorp

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

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

Diversification Opportunities for BayCom Corp and Capital Bancorp

0.66

Correlation Coefficient

BayCom Corp  Capital Bancorp

Poor diversification

The 3 months correlation between BayCom and Capital is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BayCom Corp and Capital Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Bancorp 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 Capital Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Bancorp has no effect on the direction of BayCom Corp i.e., BayCom Corp and Capital Bancorp go up and down completely randomly.

Pair Corralation between BayCom Corp and Capital Bancorp

Given the investment horizon of 90 days BayCom Corp is expected to under-perform the Capital Bancorp. In addition to that, BayCom Corp is 1.15 times more volatile than Capital Bancorp. It trades about -0.05 of its total potential returns per unit of risk. Capital Bancorp is currently generating about 0.01 per unit of volatility. If you would invest  2,860  in Capital Bancorp on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Capital Bancorp or generate 0.0% return on investment over 90 days.

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

BayCom Corp  vs.  Capital 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.

Capital Bancorp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BayCom Corp and Capital Bancorp

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

The idea behind BayCom Corp and Capital 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.