Correlation Between City Holding and BancFirst
Can any of the company-specific risk be diversified away by investing in both City Holding 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 City Holding and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Holding and BancFirst, you can compare the effects of market volatilities on City Holding 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 City Holding with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Holding and BancFirst.
Diversification Opportunities for City Holding and BancFirst
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between City and BancFirst is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding City Holding and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and City Holding 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 City Holding 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 City Holding i.e., City Holding and BancFirst go up and down completely randomly.
Pair Corralation between City Holding and BancFirst
Given the investment horizon of 90 days City Holding is expected to generate 1.24 times less return on investment than BancFirst. But when comparing it to its historical volatility, City Holding is 1.21 times less risky than BancFirst. It trades about 0.17 of its potential returns per unit of risk. BancFirst is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 11,090 in BancFirst on August 31, 2024 and sell it today you would earn a total of 1,538 from holding BancFirst or generate 13.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Holding vs. BancFirst
Performance |
| Timeline |
| City Holding |
| BancFirst |
City Holding and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Holding and BancFirst
The main advantage of trading using opposite City Holding and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Holding 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.| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar Bancorp |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |