Correlation Between Amazon and BancFirst

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BancFirst, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BancFirst.

Diversification Opportunities for Amazon and BancFirst

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Amazon and BancFirst is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and BancFirst go up and down completely randomly.

Pair Corralation between Amazon and BancFirst

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.04 times more return on investment than BancFirst. However, Amazon is 1.04 times more volatile than BancFirst. It trades about 0.44 of its potential returns per unit of risk. BancFirst is currently generating about -0.05 per unit of risk. If you would invest  8,582  in Amazon Inc on November 4, 2022 and sell it today you would earn a total of  1,933  from holding Amazon Inc or generate 22.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Amazon Inc  vs.  BancFirst

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Amazon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Amazon Price Channel

BancFirst 
BancFirst Performance
0 of 100
Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

BancFirst Price Channel

Amazon and BancFirst Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and BancFirst

The main advantage of trading using opposite Amazon and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon Inc and BancFirst 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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