Correlation Between Equity Bancshares, and BancFirst

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

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

Diversification Opportunities for Equity Bancshares, and BancFirst

0.95

Correlation Coefficient

Equity Bancshares,  BancFirst

Almost no diversification

The 3 months correlation between Equity and BancFirst is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Equity Bancshares, 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 Equity Bancshares, 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 Equity Bancshares, i.e., Equity Bancshares, and BancFirst go up and down completely randomly.

Pair Corralation between Equity Bancshares, and BancFirst

Given the investment horizon of 90 days Equity Bancshares, is expected to generate 1.07 times more return on investment than BancFirst. However, Equity Bancshares, is 1.07 times more volatile than BancFirst. It trades about -0.06 of its potential returns per unit of risk. BancFirst is currently generating about -0.08 per unit of risk. If you would invest  4,243  in Equity Bancshares, on December 30, 2024 and sell it today you would lose (294.00) from holding Equity Bancshares, or give up 6.93% of portfolio value over 90 days.

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

Equity Bancshares,  vs.  BancFirst

Equity Bancshares,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Bancshares, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional 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 Equity Bancshares, and BancFirst

The main advantage of trading using opposite Equity Bancshares, and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Bancshares, 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 Equity Bancshares, 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.