Correlation Between BOK Financial and German American
Can any of the company-specific risk be diversified away by investing in both BOK Financial and German American 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 BOK Financial and German American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOK Financial and German American Bancorp, you can compare the effects of market volatilities on BOK Financial and German American 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 BOK Financial with a short position of German American. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOK Financial and German American.
Diversification Opportunities for BOK Financial and German American
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BOK and German is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BOK Financial and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp and BOK Financial 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 BOK Financial are associated (or correlated) with German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of BOK Financial i.e., BOK Financial and German American go up and down completely randomly.
Pair Corralation between BOK Financial and German American
Given the investment horizon of 90 days BOK Financial is expected to under-perform the German American. But the stock apears to be less risky and, when comparing its historical volatility, BOK Financial is 1.15 times less risky than German American. The stock trades about -0.08 of its potential returns per unit of risk. The German American Bancorp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,965 in German American Bancorp on November 27, 2024 and sell it today you would lose (15.00) from holding German American Bancorp or give up 0.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.24% |
Values | Daily Returns |
BOK Financial vs. German American Bancorp
Performance |
Timeline |
BOK Financial |
German American Bancorp |
BOK Financial and German American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BOK Financial and German American
The main advantage of trading using opposite BOK Financial and German American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOK Financial position performs unexpectedly, German American 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 German American will offset losses from the drop in German American's long position.BOK Financial vs. First Financial Bankshares | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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