Correlation Between CF Bankshares and BayCom Corp

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

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

Diversification Opportunities for CF Bankshares and BayCom Corp

0.79

Correlation Coefficient

CF Bankshares  BayCom Corp

Poor diversification

The 3 months correlation between CFBK and BayCom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CF Bankshares and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and CF Bankshares 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 CF Bankshares 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 CF Bankshares i.e., CF Bankshares and BayCom Corp go up and down completely randomly.

Pair Corralation between CF Bankshares and BayCom Corp

Given the investment horizon of 90 days CF Bankshares is expected to under-perform the BayCom Corp. In addition to that, CF Bankshares is 1.1 times more volatile than BayCom Corp. It trades about -0.07 of its total potential returns per unit of risk. BayCom Corp is currently generating about -0.04 per unit of volatility. If you would invest  2,733  in BayCom Corp on December 19, 2024 and sell it today you would lose (164.00) from holding BayCom Corp or give up 6.0% of portfolio value over 90 days.

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

CF Bankshares  vs.  BayCom Corp

CF Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with CF Bankshares and BayCom Corp

The main advantage of trading using opposite CF Bankshares and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Bankshares 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 CF Bankshares 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.