Correlation Between BancFirst and Ameris Bancorp

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

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

Diversification Opportunities for BancFirst and Ameris Bancorp

0.82

Correlation Coefficient

BancFirst  Ameris Bancorp

Very poor diversification

The 3 months correlation between BancFirst and Ameris is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Ameris Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameris Bancorp and BancFirst 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 BancFirst are associated (or correlated) with Ameris Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameris Bancorp has no effect on the direction of BancFirst i.e., BancFirst and Ameris Bancorp go up and down completely randomly.

Pair Corralation between BancFirst and Ameris Bancorp

Given the investment horizon of 90 days BancFirst is expected to generate 1.03 times more return on investment than Ameris Bancorp. However, BancFirst is 1.03 times more volatile than Ameris Bancorp. It trades about 0.09 of its potential returns per unit of risk. Ameris Bancorp is currently generating about 0.09 per unit of risk. If you would invest  8,465  in BancFirst on October 25, 2024 and sell it today you would earn a total of  3,606  from holding BancFirst or generate 42.6% return on investment over 90 days.

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

BancFirst  vs.  Ameris Bancorp

BancFirst

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 7 (%) 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.

Ameris Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameris Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Ameris Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BancFirst and Ameris Bancorp

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

The idea behind BancFirst and Ameris Bancorp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.