Correlation Between BankFirst Capital and United Bancorporation

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

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

Diversification Opportunities for BankFirst Capital and United Bancorporation

0.68

Correlation Coefficient

BankFirst Capital  United Bancorporation

Poor diversification

The 3 months correlation between BankFirst and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BankFirst Capital and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation and BankFirst Capital 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 BankFirst Capital are associated (or correlated) with United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of BankFirst Capital i.e., BankFirst Capital and United Bancorporation go up and down completely randomly.

Pair Corralation between BankFirst Capital and United Bancorporation

Given the investment horizon of 90 days BankFirst Capital is expected to under-perform the United Bancorporation. But the otc stock apears to be less risky and, when comparing its historical volatility, BankFirst Capital is 2.12 times less risky than United Bancorporation. The otc stock trades about -0.36 of its potential returns per unit of risk. The United Bancorporation of is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,700  in United Bancorporation of on October 9, 2024 and sell it today you would lose (51.00) from holding United Bancorporation of or give up 0.89% of portfolio value over 90 days.

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

BankFirst Capital  vs.  United Bancorp. of

BankFirst Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankFirst Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, BankFirst Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Bancorporation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Bancorporation of are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, United Bancorporation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BankFirst Capital and United Bancorporation

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

The idea behind BankFirst Capital and United Bancorporation of 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.