Correlation Between AIB Group and BancFirst

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

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

Diversification Opportunities for AIB Group and BancFirst

-0.06

Correlation Coefficient

AIB Group  BancFirst

Good diversification

The 3 months correlation between AIB and BancFirst is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and AIB Group 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 AIB Group plc are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of AIB Group i.e., AIB Group and BancFirst go up and down completely randomly.

Pair Corralation between AIB Group and BancFirst

Assuming the 90 days horizon AIB Group plc is expected to under-perform the BancFirst. But the pink sheet apears to be less risky and, when comparing its historical volatility, AIB Group plc is 1.26 times less risky than BancFirst. The pink sheet trades about -0.19 of its potential returns per unit of risk. The BancFirst is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  12,121  in BancFirst on September 21, 2024 and sell it today you would lose (260.00) from holding BancFirst or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

AIB Group plc  vs.  BancFirst

AIB Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BancFirst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, BancFirst reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIB Group and BancFirst

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

The idea behind AIB Group plc and BancFirst 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.