Correlation Between BOK Financial and Financial Institutions

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

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

Diversification Opportunities for BOK Financial and Financial Institutions

0.64

Correlation Coefficient

BOK Financial  Financial Institutions

Poor diversification

The 3 months correlation between BOK and Financial is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions 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 Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of BOK Financial i.e., BOK Financial and Financial Institutions go up and down completely randomly.

Pair Corralation between BOK Financial and Financial Institutions

Given the investment horizon of 90 days BOK Financial is expected to generate 0.96 times more return on investment than Financial Institutions. However, BOK Financial is 1.04 times less risky than Financial Institutions. It trades about -0.03 of its potential returns per unit of risk. Financial Institutions is currently generating about -0.06 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	Significant
Accuracy	100.0%
Values	Daily Returns

BOK Financial  vs.  Financial Institutions

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.

Financial Institutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial Institutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Financial Institutions is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BOK Financial and Financial Institutions

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

The idea behind BOK Financial and Financial Institutions 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.