Correlation Between BOK Financial and National Bank

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Can any of the company-specific risk be diversified away by investing in both BOK Financial and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOK Financial and National Bank Holdings, you can compare the effects of market volatilities on BOK Financial and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOK Financial and National Bank.

Diversification Opportunities for BOK Financial and National Bank

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between BOK and National is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of BOK Financial i.e., BOK Financial and National Bank go up and down completely randomly.

Pair Corralation between BOK Financial and National Bank

Given the investment horizon of 90 days BOK Financial is expected to generate 0.85 times more return on investment than National Bank. However, BOK Financial is 1.18 times less risky than National Bank. It trades about 0.09 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.05 per unit of risk. If you would invest  8,983  in BOK Financial on September 29, 2024 and sell it today you would earn a total of  1,837  from holding BOK Financial or generate 20.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

BOK Financial  vs.  National Bank Holdings

 Performance 
       Timeline  
BOK Financial 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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.
National Bank Holdings 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, National Bank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BOK Financial and National Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BOK Financial and National Bank

The main advantage of trading using opposite BOK Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOK Financial position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.
The idea behind BOK Financial and National Bank Holdings 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.
Check out your portfolio center.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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