Correlation Between BancFirst and Codorus Valley

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

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

Diversification Opportunities for BancFirst and Codorus Valley

0.17

Correlation Coefficient

BancFirst  Codorus Valley

Average diversification

The 3 months correlation between BancFirst and Codorus is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Codorus Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codorus Valley 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 Codorus Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codorus Valley Bancorp has no effect on the direction of BancFirst i.e., BancFirst and Codorus Valley go up and down completely randomly.

Pair Corralation between BancFirst and Codorus Valley

Given the investment horizon of 90 days BancFirst is expected to generate 1.18 times more return on investment than Codorus Valley. However, BancFirst is 1.18 times more volatile than Codorus Valley Bancorp. It trades about 0.04 of its potential returns per unit of risk. Codorus Valley Bancorp is currently generating about 0.02 per unit of risk. If you would invest  8,434  in BancFirst on September 21, 2024 and sell it today you would earn a total of  3,291  from holding BancFirst or generate 39.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.76%
Values	Daily Returns

BancFirst  vs.  Codorus Valley Bancorp

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Codorus Valley Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Codorus Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Codorus Valley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BancFirst and Codorus Valley

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

The idea behind BancFirst and Codorus Valley 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.