Correlation Between Heritage Commerce and BancFirst
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce 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 Heritage Commerce and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Commerce Corp and BancFirst, you can compare the effects of market volatilities on Heritage Commerce 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 Heritage Commerce with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and BancFirst.
Diversification Opportunities for Heritage Commerce and BancFirst
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heritage and BancFirst is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Heritage Commerce 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 Heritage Commerce Corp 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 Heritage Commerce i.e., Heritage Commerce and BancFirst go up and down completely randomly.
Pair Corralation between Heritage Commerce and BancFirst
Given the investment horizon of 90 days Heritage Commerce is expected to generate 10.34 times less return on investment than BancFirst. In addition to that, Heritage Commerce is 1.15 times more volatile than BancFirst. It trades about 0.0 of its total potential returns per unit of risk. BancFirst is currently generating about 0.04 per unit of volatility. If you would invest 9,007 in BancFirst on August 28, 2024 and sell it today you would earn a total of 3,802 from holding BancFirst or generate 42.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Commerce Corp vs. BancFirst
Performance |
| Timeline |
| Heritage Commerce Corp |
| BancFirst |
Heritage Commerce and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Commerce and BancFirst
The main advantage of trading using opposite Heritage Commerce and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce 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.| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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