Correlation Between Renasant and BOK Financial

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

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

Diversification Opportunities for Renasant and BOK Financial

0.91

Correlation Coefficient

Renasant  BOK Financial

Almost no diversification

The 3 months correlation between Renasant and BOK is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Renasant and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and Renasant 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 Renasant 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 Renasant i.e., Renasant and BOK Financial go up and down completely randomly.

Pair Corralation between Renasant and BOK Financial

Given the investment horizon of 90 days Renasant is expected to generate 1.3 times less return on investment than BOK Financial. In addition to that, Renasant is 1.15 times more volatile than BOK Financial. It trades about 0.08 of its total potential returns per unit of risk. BOK Financial is currently generating about 0.12 per unit of volatility. If you would invest  10,294  in BOK Financial on September 4, 2024 and sell it today you would earn a total of  1,567  from holding BOK Financial or generate 15.22% return on investment over 90 days.

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

Renasant  vs.  BOK Financial

Renasant

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Renasant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Renasant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BOK Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOK Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, BOK Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renasant and BOK Financial

The main advantage of trading using opposite Renasant and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renasant 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 Renasant 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.