Correlation Between BOK Financial and Franklin Financial

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

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

Diversification Opportunities for BOK Financial and Franklin Financial

0.77

Correlation Coefficient

BOK Financial  Franklin Financial

Poor diversification

The 3 months correlation between BOK and Franklin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and Franklin Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Financial 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 Franklin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Financial has no effect on the direction of BOK Financial i.e., BOK Financial and Franklin Financial go up and down completely randomly.

Pair Corralation between BOK Financial and Franklin Financial

Given the investment horizon of 90 days BOK Financial is expected to generate 1.4 times more return on investment than Franklin Financial. However, BOK Financial is 1.4 times more volatile than Franklin Financial Services. It trades about -0.32 of its potential returns per unit of risk. Franklin Financial Services is currently generating about -0.53 per unit of risk. If you would invest  11,887  in BOK Financial on September 29, 2024 and sell it today you would lose (1,067) from holding BOK Financial or give up 8.98% 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.  Franklin Financial Services

BOK Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BOK Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Franklin Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Franklin Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BOK Financial and Franklin Financial

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

The idea behind BOK Financial and Franklin Financial Services 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 Transaction History module to view history of all your transactions and understand their impact on performance.