Correlation Between BancFirst and BCB Bancorp

Can any of the company-specific risk be diversified away by investing in both BancFirst and BCB Bancorp 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 BancFirst and BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BancFirst and BCB Bancorp, you can compare the effects of market volatilities on BancFirst and BCB Bancorp 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 BancFirst with a short position of BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BancFirst and BCB Bancorp.

Diversification Opportunities for BancFirst and BCB Bancorp

0.49

Correlation Coefficient

BancFirst  BCB Bancorp

Very weak diversification

The 3 months correlation between BancFirst and BCB is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp and BancFirst 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 BancFirst are associated (or correlated) with BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of BancFirst i.e., BancFirst and BCB Bancorp go up and down completely randomly.

Pair Corralation between BancFirst and BCB Bancorp

Given the investment horizon of 90 days BancFirst is expected to generate 0.87 times more return on investment than BCB Bancorp. However, BancFirst is 1.16 times less risky than BCB Bancorp. It trades about 0.06 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.1 per unit of risk. If you would invest  8,569  in BancFirst on February 1, 2024 and sell it today you would earn a total of  348.00  from holding BancFirst or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BancFirst  vs.  BCB Bancorp

BancFirst

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BancFirst is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BCB Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with BancFirst and BCB Bancorp

The main advantage of trading using opposite BancFirst and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BancFirst position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.

The idea behind BancFirst and BCB Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.