Correlation Between BOK Financial and Northeast Bancorp

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

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

Diversification Opportunities for BOK Financial and Northeast Bancorp

0.9

Correlation Coefficient

BOK Financial  Northeast Bancorp

Almost no diversification

The 3 months correlation between BOK and Northeast is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of BOK Financial i.e., BOK Financial and Northeast Bancorp go up and down completely randomly.

Pair Corralation between BOK Financial and Northeast Bancorp

Given the investment horizon of 90 days BOK Financial is expected to generate 0.58 times more return on investment than Northeast Bancorp. However, BOK Financial is 1.74 times less risky than Northeast Bancorp. It trades about 0.09 of its potential returns per unit of risk. Northeast Bancorp is currently generating about -0.07 per unit of risk. If you would invest  11,407  in BOK Financial on September 15, 2024 and sell it today you would earn a total of  198.00  from holding BOK Financial or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

BOK Financial  vs.  Northeast Bancorp

BOK Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOK Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, BOK Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Northeast Bancorp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northeast Bancorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Northeast Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOK Financial and Northeast Bancorp

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

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