Correlation Between BancFirst and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both BancFirst and NBT 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 NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BancFirst and NBT Bancorp, you can compare the effects of market volatilities on BancFirst and NBT 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 NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and NBT Bancorp.
Diversification Opportunities for BancFirst and NBT Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BancFirst and NBT is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT 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 NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of BancFirst i.e., BancFirst and NBT Bancorp go up and down completely randomly.
Pair Corralation between BancFirst and NBT Bancorp
Given the investment horizon of 90 days BancFirst is expected to generate 1.18 times more return on investment than NBT Bancorp. However, BancFirst is 1.18 times more volatile than NBT Bancorp. It trades about 0.19 of its potential returns per unit of risk. NBT Bancorp is currently generating about 0.19 per unit of risk. If you would invest 11,120 in BancFirst on August 28, 2024 and sell it today you would earn a total of 1,689 from holding BancFirst or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BancFirst vs. NBT Bancorp
Performance |
| Timeline |
| BancFirst |
| NBT Bancorp |
BancFirst and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BancFirst and NBT Bancorp
The main advantage of trading using opposite BancFirst and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BancFirst position performs unexpectedly, NBT 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 NBT Bancorp will offset losses from the drop in NBT Bancorp's long position.| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First Bancorp |
| NBT Bancorp vs. Oak Valley Bancorp | NBT Bancorp vs. Home Federal Bancorp | NBT Bancorp vs. Finward Bancorp | NBT Bancorp vs. Community West 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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