Correlation Between Comerica and BancFirst

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

By analyzing existing cross correlation between Comerica and BancFirst, you can compare the effects of market volatilities on Comerica and BancFirst 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 Comerica with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and BancFirst.

Diversification Opportunities for Comerica and BancFirst

0.29

Correlation Coefficient

Comerica  BancFirst

Modest diversification

The 3 months correlation between Comerica and BancFirst is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Comerica 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 Comerica are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Comerica i.e., Comerica and BancFirst go up and down completely randomly.

Pair Corralation between Comerica and BancFirst

Considering the 90-day investment horizon Comerica is expected to under-perform the BancFirst. But the stock apears to be less risky and, when comparing its historical volatility, Comerica is 1.28 times less risky than BancFirst. The stock trades about -0.18 of its potential returns per unit of risk. The BancFirst is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  11,654  in BancFirst on December 5, 2024 and sell it today you would lose (158.00) from holding BancFirst or give up 1.36% of portfolio value over 90 days.

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

Comerica  vs.  BancFirst

Comerica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BancFirst

Risk-Adjusted Performance

Very Weak

Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Comerica and BancFirst

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

The idea behind Comerica and BancFirst 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.