Correlation Between BancFirst and First Guaranty
Can any of the company-specific risk be diversified away by investing in both BancFirst and First Guaranty 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 BancFirst and First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BancFirst and First Guaranty Bancshares, you can compare the effects of market volatilities on BancFirst and First Guaranty 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 BancFirst with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and First Guaranty.
Diversification Opportunities for BancFirst and First Guaranty
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BancFirst and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and BancFirst 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 BancFirst are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of BancFirst i.e., BancFirst and First Guaranty go up and down completely randomly.
Pair Corralation between BancFirst and First Guaranty
Given the investment horizon of 90 days BancFirst is expected to generate 0.7 times more return on investment than First Guaranty. However, BancFirst is 1.42 times less risky than First Guaranty. It trades about 0.06 of its potential returns per unit of risk. First Guaranty Bancshares is currently generating about -0.22 per unit of risk. If you would invest 11,718 in BancFirst on November 1, 2024 and sell it today you would earn a total of 175.00 from holding BancFirst or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BancFirst vs. First Guaranty Bancshares
Performance |
| Timeline |
| BancFirst |
| First Guaranty Bancshares |
BancFirst and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BancFirst and First Guaranty
The main advantage of trading using opposite BancFirst and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BancFirst position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
| First Guaranty vs. Home Federal Bancorp | First Guaranty vs. Magyar Bancorp | First Guaranty vs. First Capital | First Guaranty vs. HomeTrust Bancshares |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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