Correlation Between BOK Financial and BancFirst

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

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

Diversification Opportunities for BOK Financial and BancFirst

0.93

Correlation Coefficient

BOK Financial  BancFirst

Almost no diversification

The 3 months correlation between BOK and BancFirst is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and BOK Financial 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 BOK Financial 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 BOK Financial i.e., BOK Financial and BancFirst go up and down completely randomly.

Pair Corralation between BOK Financial and BancFirst

Given the investment horizon of 90 days BOK Financial is expected to generate 0.98 times more return on investment than BancFirst. However, BOK Financial is 1.02 times less risky than BancFirst. It trades about -0.03 of its potential returns per unit of risk. BancFirst is currently generating about -0.08 per unit of risk. If you would invest  10,677  in BOK Financial on December 29, 2024 and sell it today you would lose (313.00) from holding BOK Financial or give up 2.93% of portfolio value over 90 days.

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

BOK Financial  vs.  BancFirst

BOK Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOK Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, BOK Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BancFirst

Risk-Adjusted Performance

Very Weak

Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BOK Financial and BancFirst

The main advantage of trading using opposite BOK Financial and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOK Financial 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 BOK Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.