Correlation Between BBVA Banco and BancFirst
Can any of the company-specific risk be diversified away by investing in both BBVA Banco and BancFirst 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 BBVA Banco and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and BancFirst, you can compare the effects of market volatilities on BBVA Banco and BancFirst 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 BBVA Banco with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and BancFirst.
Diversification Opportunities for BBVA Banco and BancFirst
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBVA and BancFirst is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and BBVA Banco 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 BBVA Banco Frances are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of BBVA Banco i.e., BBVA Banco and BancFirst go up and down completely randomly.
Pair Corralation between BBVA Banco and BancFirst
Given the investment horizon of 90 days BBVA Banco Frances is expected to generate 0.9 times more return on investment than BancFirst. However, BBVA Banco Frances is 1.11 times less risky than BancFirst. It trades about 0.25 of its potential returns per unit of risk. BancFirst is currently generating about 0.2 per unit of risk. If you would invest 1,377 in BBVA Banco Frances on September 1, 2024 and sell it today you would earn a total of 259.00 from holding BBVA Banco Frances or generate 18.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. BancFirst
Performance |
| Timeline |
| BBVA Banco Frances |
| BancFirst |
BBVA Banco and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and BancFirst
The main advantage of trading using opposite BBVA Banco and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco position performs unexpectedly, BancFirst 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 BancFirst will offset losses from the drop in BancFirst's long position.| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
| BancFirst vs. Glacier Bancorp | BancFirst vs. BOK Financial | BancFirst vs. First Financial Bancorp | BancFirst vs. First 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |