Correlation Between BancFirst and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both BancFirst and Northeast Bancorp 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 Northeast Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BancFirst and Northeast Bancorp, you can compare the effects of market volatilities on BancFirst and Northeast Bancorp 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and Northeast Bancorp.
Diversification Opportunities for BancFirst and Northeast Bancorp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BancFirst and Northeast is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Bancorp 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of BancFirst i.e., BancFirst and Northeast Bancorp go up and down completely randomly.
Pair Corralation between BancFirst and Northeast Bancorp
Given the investment horizon of 90 days BancFirst is expected to generate 3.34 times less return on investment than Northeast Bancorp. But when comparing it to its historical volatility, BancFirst is 1.2 times less risky than Northeast Bancorp. It trades about 0.1 of its potential returns per unit of risk. Northeast Bancorp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,253 in Northeast Bancorp on October 20, 2024 and sell it today you would earn a total of 837.00 from holding Northeast Bancorp or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BancFirst vs. Northeast Bancorp
Performance |
| Timeline |
| BancFirst |
| Northeast Bancorp |
BancFirst and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BancFirst and Northeast Bancorp
The main advantage of trading using opposite BancFirst and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BancFirst position performs unexpectedly, Northeast Bancorp 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar Bancorp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |