Correlation Between Bayfirst Financial and Arrow Financial

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

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

Diversification Opportunities for Bayfirst Financial and Arrow Financial

-0.29

Correlation Coefficient

Bayfirst Financial  Arrow Financial

Very good diversification

The 3 months correlation between Bayfirst and Arrow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bayfirst Financial Corp and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and Bayfirst Financial 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 Bayfirst Financial Corp are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Bayfirst Financial i.e., Bayfirst Financial and Arrow Financial go up and down completely randomly.

Pair Corralation between Bayfirst Financial and Arrow Financial

Given the investment horizon of 90 days Bayfirst Financial Corp is expected to under-perform the Arrow Financial. In addition to that, Bayfirst Financial is 1.93 times more volatile than Arrow Financial. It trades about -0.09 of its total potential returns per unit of risk. Arrow Financial is currently generating about 0.06 per unit of volatility. If you would invest  2,487  in Arrow Financial on May 4, 2025 and sell it today you would earn a total of  129.00  from holding Arrow Financial or generate 5.19% return on investment over 90 days.

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

Bayfirst Financial Corp  vs.  Arrow Financial

Bayfirst Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayfirst Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arrow Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Arrow Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bayfirst Financial and Arrow Financial

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

The idea behind Bayfirst Financial Corp and Arrow Financial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.