Correlation Between BOK Financial and Heartland Financial

Can any of the company-specific risk be diversified away by investing in both BOK Financial and Heartland 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 Heartland 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 Heartland Financial USA, you can compare the effects of market volatilities on BOK Financial and Heartland 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOK Financial and Heartland Financial.

Diversification Opportunities for BOK Financial and Heartland Financial

0.08

Correlation Coefficient

BOK Financial  Heartland Financial

Significant diversification

The 3 months correlation between BOK and Heartland is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of BOK Financial i.e., BOK Financial and Heartland Financial go up and down completely randomly.

Pair Corralation between BOK Financial and Heartland Financial

Given the investment horizon of 90 days BOK Financial is expected to under-perform the Heartland Financial. But the stock apears to be less risky and, when comparing its historical volatility, BOK Financial is 1.02 times less risky than Heartland Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Heartland Financial USA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  6,106  in Heartland Financial USA on December 28, 2024 and sell it today you would earn a total of  361.00  from holding Heartland Financial USA or generate 5.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	37.7%
Values	Daily Returns

BOK Financial  vs.  Heartland Financial USA

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.

Heartland Financial USA

Risk-Adjusted Performance

Good

Over the last 90 days Heartland Financial USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak essential indicators, Heartland Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOK Financial and Heartland Financial

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

The idea behind BOK Financial and Heartland Financial USA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .