Correlation Between Northeast Bancorp and BancFirst
Can any of the company-specific risk be diversified away by investing in both Northeast Bancorp 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 Northeast Bancorp and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northeast Bancorp and BancFirst, you can compare the effects of market volatilities on Northeast Bancorp 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 Northeast Bancorp with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northeast Bancorp and BancFirst.
Diversification Opportunities for Northeast Bancorp and BancFirst
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northeast and BancFirst is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Bancorp and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Northeast Bancorp 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 Northeast Bancorp 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 Northeast Bancorp i.e., Northeast Bancorp and BancFirst go up and down completely randomly.
Pair Corralation between Northeast Bancorp and BancFirst
Considering the 90-day investment horizon Northeast Bancorp is expected to generate 1.12 times more return on investment than BancFirst. However, Northeast Bancorp is 1.12 times more volatile than BancFirst. It trades about 0.33 of its potential returns per unit of risk. BancFirst is currently generating about 0.13 per unit of risk. If you would invest 9,153 in Northeast Bancorp on November 3, 2024 and sell it today you would earn a total of 967.00 from holding Northeast Bancorp or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northeast Bancorp vs. BancFirst
Performance |
| Timeline |
| Northeast Bancorp |
| BancFirst |
Northeast Bancorp and BancFirst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northeast Bancorp and BancFirst
The main advantage of trading using opposite Northeast Bancorp and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northeast Bancorp 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.| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |