Correlation Between United Bankshares and BOK Financial
Can any of the company-specific risk be diversified away by investing in both United Bankshares 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 United Bankshares and BOK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bankshares and BOK Financial, you can compare the effects of market volatilities on United Bankshares 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 United Bankshares with a short position of BOK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bankshares and BOK Financial.
Diversification Opportunities for United Bankshares and BOK Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and BOK is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and United Bankshares 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 United Bankshares 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 United Bankshares i.e., United Bankshares and BOK Financial go up and down completely randomly.
Pair Corralation between United Bankshares and BOK Financial
Given the investment horizon of 90 days United Bankshares is expected to generate 1.08 times more return on investment than BOK Financial. However, United Bankshares is 1.08 times more volatile than BOK Financial. It trades about 0.19 of its potential returns per unit of risk. BOK Financial is currently generating about 0.18 per unit of risk. If you would invest 3,845 in United Bankshares on August 28, 2024 and sell it today you would earn a total of 484.00 from holding United Bankshares or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Bankshares vs. BOK Financial
Performance |
| Timeline |
| United Bankshares |
| BOK Financial |
United Bankshares and BOK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bankshares and BOK Financial
The main advantage of trading using opposite United Bankshares and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares 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.| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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