Correlation Between First Guaranty and BancFirst
Can any of the company-specific risk be diversified away by investing in both First Guaranty 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 First Guaranty and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Guaranty Bancshares and BancFirst, you can compare the effects of market volatilities on First Guaranty 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 First Guaranty with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Guaranty and BancFirst.
Diversification Opportunities for First Guaranty and BancFirst
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and BancFirst is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Guaranty Bancshares and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and First Guaranty 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 First Guaranty 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 First Guaranty i.e., First Guaranty and BancFirst go up and down completely randomly.
Pair Corralation between First Guaranty and BancFirst
Given the investment horizon of 90 days First Guaranty Bancshares is expected to generate 0.54 times more return on investment than BancFirst. However, First Guaranty Bancshares is 1.87 times less risky than BancFirst. It trades about 0.66 of its potential returns per unit of risk. BancFirst is currently generating about 0.19 per unit of risk. If you would invest 1,012 in First Guaranty Bancshares on August 28, 2024 and sell it today you would earn a total of 328.00 from holding First Guaranty Bancshares or generate 32.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Guaranty Bancshares vs. BancFirst
Performance |
| Timeline |
| First Guaranty Bancshares |
| BancFirst |
First Guaranty and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Guaranty and BancFirst
The main advantage of trading using opposite First Guaranty and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Guaranty 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.| First Guaranty vs. Fifth Third Bancorp | First Guaranty vs. Zions Bancorporation | First Guaranty vs. Huntington Bancshares Incorporated | First Guaranty vs. Comerica |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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