Correlation Between Investar Holding and BayCom Corp

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

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

Diversification Opportunities for Investar Holding and BayCom Corp

0.84

Correlation Coefficient

Investar Holding  BayCom Corp

Very poor diversification

The 3 months correlation between Investar and BayCom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Investar Holding 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 Investar Holding Corp 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 Investar Holding i.e., Investar Holding and BayCom Corp go up and down completely randomly.

Pair Corralation between Investar Holding and BayCom Corp

Given the investment horizon of 90 days Investar Holding is expected to generate 1.29 times less return on investment than BayCom Corp. But when comparing it to its historical volatility, Investar Holding Corp is 1.04 times less risky than BayCom Corp. It trades about 0.06 of its potential returns per unit of risk. BayCom Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,945  in BayCom Corp on October 22, 2024 and sell it today you would earn a total of  714.00  from holding BayCom Corp or generate 36.71% return on investment over 90 days.

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

Investar Holding Corp  vs.  BayCom Corp

Investar Holding Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investar Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Investar Holding is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BayCom Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BayCom Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, BayCom Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Investar Holding and BayCom Corp

The main advantage of trading using opposite Investar Holding and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding 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 Investar Holding Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.