Correlation Between Home Bancorp and Bayfirst Financial
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Bayfirst Financial 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 Home Bancorp and Bayfirst Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Bayfirst Financial Corp, you can compare the effects of market volatilities on Home Bancorp and Bayfirst Financial 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 Home Bancorp with a short position of Bayfirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Bayfirst Financial.
Diversification Opportunities for Home Bancorp and Bayfirst Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Bayfirst is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Bayfirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayfirst Financial Corp and Home Bancorp 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 Home Bancorp are associated (or correlated) with Bayfirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayfirst Financial Corp has no effect on the direction of Home Bancorp i.e., Home Bancorp and Bayfirst Financial go up and down completely randomly.
Pair Corralation between Home Bancorp and Bayfirst Financial
Given the investment horizon of 90 days Home Bancorp is expected to under-perform the Bayfirst Financial. But the stock apears to be less risky and, when comparing its historical volatility, Home Bancorp is 1.83 times less risky than Bayfirst Financial. The stock trades about -0.32 of its potential returns per unit of risk. The Bayfirst Financial Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. 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 Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Home Bancorp vs. Bayfirst Financial Corp
Performance |
Timeline |
Home Bancorp |
Bayfirst Financial Corp |
Home Bancorp and Bayfirst Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Bancorp and Bayfirst Financial
The main advantage of trading using opposite Home Bancorp and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Bayfirst Financial 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 Bayfirst Financial will offset losses from the drop in Bayfirst Financial's long position.Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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