Correlation Between Home Bancorp and BOK Financial

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

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

Diversification Opportunities for Home Bancorp and BOK Financial

0.64

Correlation Coefficient

Home Bancorp  BOK Financial

Poor diversification

The 3 months correlation between Home and BOK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and Home Bancorp 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 Home 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 Home Bancorp i.e., Home Bancorp and BOK Financial go up and down completely randomly.

Pair Corralation between Home Bancorp and BOK Financial

Given the investment horizon of 90 days Home Bancorp is expected to generate 1.22 times more return on investment than BOK Financial. However, Home Bancorp is 1.22 times more volatile than BOK Financial. It trades about 0.0 of its potential returns per unit of risk. BOK Financial is currently generating about -0.03 per unit of risk. If you would invest  4,655  in Home Bancorp on December 26, 2024 and sell it today you would lose (49.00) from holding Home Bancorp or give up 1.05% of portfolio value over 90 days.

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

Home Bancorp  vs.  BOK Financial

Home Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Home Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 Home Bancorp and BOK Financial

The main advantage of trading using opposite Home Bancorp and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp 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 Home 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.