Correlation Between Commerce Bancshares and BancFirst
Can any of the company-specific risk be diversified away by investing in both Commerce Bancshares 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 Commerce Bancshares and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Bancshares and BancFirst, you can compare the effects of market volatilities on Commerce Bancshares 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 Commerce Bancshares with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and BancFirst.
Diversification Opportunities for Commerce Bancshares and BancFirst
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Commerce and BancFirst is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Commerce Bancshares 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 Commerce Bancshares 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 Commerce Bancshares i.e., Commerce Bancshares and BancFirst go up and down completely randomly.
Pair Corralation between Commerce Bancshares and BancFirst
Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.68 times more return on investment than BancFirst. However, Commerce Bancshares is 1.47 times less risky than BancFirst. It trades about 0.33 of its potential returns per unit of risk. BancFirst is currently generating about 0.19 per unit of risk. If you would invest 6,228 in Commerce Bancshares on August 28, 2024 and sell it today you would earn a total of 1,208 from holding Commerce Bancshares or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerce Bancshares vs. BancFirst
Performance |
| Timeline |
| Commerce Bancshares |
| BancFirst |
Commerce Bancshares and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Bancshares and BancFirst
The main advantage of trading using opposite Commerce Bancshares and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares 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.| Commerce Bancshares vs. BOK Financial | Commerce Bancshares vs. Texas Capital Bancshares | Commerce Bancshares vs. United Bankshares | Commerce Bancshares vs. Prosperity Bancshares |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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