Correlation Between First Interstate and BancFirst
Can any of the company-specific risk be diversified away by investing in both First Interstate 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 Interstate and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Interstate BancSystem and BancFirst, you can compare the effects of market volatilities on First Interstate 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 Interstate with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Interstate and BancFirst.
Diversification Opportunities for First Interstate and BancFirst
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and BancFirst is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and First Interstate 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 Interstate BancSystem 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 Interstate i.e., First Interstate and BancFirst go up and down completely randomly.
Pair Corralation between First Interstate and BancFirst
Given the investment horizon of 90 days First Interstate is expected to generate 1.27 times less return on investment than BancFirst. In addition to that, First Interstate is 1.0 times more volatile than BancFirst. It trades about 0.12 of its total potential returns per unit of risk. BancFirst is currently generating about 0.15 per unit of volatility. If you would invest 8,355 in BancFirst on August 31, 2024 and sell it today you would earn a total of 4,273 from holding BancFirst or generate 51.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Interstate BancSystem vs. BancFirst
Performance |
| Timeline |
| First Interstate Ban |
| BancFirst |
First Interstate and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Interstate and BancFirst
The main advantage of trading using opposite First Interstate and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Interstate 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 Interstate vs. First Financial Bankshares | First Interstate vs. Independent Bank Group | First Interstate vs. CVB Financial | First Interstate vs. Eagle Bancorp Montana |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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