Correlation Between BOK Financial and German American

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

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

Diversification Opportunities for BOK Financial and German American

0.63

Correlation Coefficient

BOK Financial  German American

Poor diversification

The 3 months correlation between BOK and German is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp 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 German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of BOK Financial i.e., BOK Financial and German American go up and down completely randomly.

Pair Corralation between BOK Financial and German American

Given the investment horizon of 90 days BOK Financial is expected to generate 1.06 times more return on investment than German American. However, BOK Financial is 1.06 times more volatile than German American Bancorp. It trades about -0.02 of its potential returns per unit of risk. German American Bancorp is currently generating about -0.06 per unit of risk. If you would invest  10,765  in BOK Financial on December 27, 2024 and sell it today you would lose (253.00) from holding BOK Financial or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

BOK Financial  vs.  German American Bancorp

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.

German American Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days German American Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, German American is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BOK Financial and German American

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

The idea behind BOK Financial and German American 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.