Correlation Between BancFirst and Amalgamated Bank

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

By analyzing existing cross correlation between BancFirst and Amalgamated Bank, you can compare the effects of market volatilities on BancFirst and Amalgamated Bank 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 Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and Amalgamated Bank.

Diversification Opportunities for BancFirst and Amalgamated Bank

0.88

Correlation Coefficient

BancFirst  Amalgamated Bank

Very poor diversification

The 3 months correlation between BancFirst and Amalgamated is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank 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 Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of BancFirst i.e., BancFirst and Amalgamated Bank go up and down completely randomly.

Pair Corralation between BancFirst and Amalgamated Bank

Given the investment horizon of 90 days BancFirst is expected to under-perform the Amalgamated Bank. In addition to that, BancFirst is 1.15 times more volatile than Amalgamated Bank. It trades about -0.3 of its total potential returns per unit of risk. Amalgamated Bank is currently generating about -0.24 per unit of volatility. If you would invest  3,539  in Amalgamated Bank on October 10, 2024 and sell it today you would lose (229.00) from holding Amalgamated Bank or give up 6.47% of portfolio value over 90 days.

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

BancFirst  vs.  Amalgamated Bank

BancFirst

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 6 (%) 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.

Amalgamated Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Amalgamated Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BancFirst and Amalgamated Bank

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

The idea behind BancFirst and Amalgamated Bank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.