Correlation Between Financial Institutions and BOK Financial
Can any of the company-specific risk be diversified away by investing in both Financial Institutions and BOK Financial 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 Financial Institutions and BOK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions and BOK Financial, you can compare the effects of market volatilities on Financial Institutions and BOK Financial 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 Financial Institutions with a short position of BOK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and BOK Financial.
Diversification Opportunities for Financial Institutions and BOK Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Financial and BOK is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and Financial Institutions 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 Financial Institutions are associated (or correlated) with BOK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOK Financial has no effect on the direction of Financial Institutions i.e., Financial Institutions and BOK Financial go up and down completely randomly.
Pair Corralation between Financial Institutions and BOK Financial
Given the investment horizon of 90 days Financial Institutions is expected to generate 1.24 times more return on investment than BOK Financial. However, Financial Institutions is 1.24 times more volatile than BOK Financial. It trades about 0.12 of its potential returns per unit of risk. BOK Financial is currently generating about 0.13 per unit of risk. If you would invest 2,561 in Financial Institutions on August 24, 2024 and sell it today you would earn a total of 229.00 from holding Financial Institutions or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Institutions vs. BOK Financial
Performance |
| Timeline |
| Financial Institutions |
| BOK Financial |
Financial Institutions and BOK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Institutions and BOK Financial
The main advantage of trading using opposite Financial Institutions and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions position performs unexpectedly, BOK Financial 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 BOK Financial will offset losses from the drop in BOK Financial's long position.| Financial Institutions vs. Banco Bradesco SA | Financial Institutions vs. Itau Unibanco Banco | Financial Institutions vs. Banco Santander Brasil | Financial Institutions vs. Western Alliance Bancorporation |
| BOK Financial vs. First Financial Bankshares | BOK Financial vs. Auburn National Bancorporation | BOK Financial vs. Great Southern Bancorp | BOK Financial vs. First Guaranty Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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