Correlation Between Great Southern and BOK Financial

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

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

Diversification Opportunities for Great Southern and BOK Financial

0.87

Correlation Coefficient

Great Southern  BOK Financial

Very poor diversification

The 3 months correlation between Great and BOK is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and Great Southern 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 Great Southern Bancorp are associated (or correlated) with BOK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOK Financial has no effect on the direction of Great Southern i.e., Great Southern and BOK Financial go up and down completely randomly.

Pair Corralation between Great Southern and BOK Financial

Given the investment horizon of 90 days Great Southern is expected to generate 1.09 times less return on investment than BOK Financial. In addition to that, Great Southern is 1.05 times more volatile than BOK Financial. It trades about 0.02 of its total potential returns per unit of risk. BOK Financial is currently generating about 0.02 per unit of volatility. If you would invest  9,910  in BOK Financial on November 20, 2024 and sell it today you would earn a total of  1,147  from holding BOK Financial or generate 11.57% return on investment over 90 days.

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

Great Southern Bancorp  vs.  BOK Financial

Great Southern Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Southern Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Great Southern is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Great Southern and BOK Financial

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

The idea behind Great Southern Bancorp and BOK Financial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.