Correlation Between Espey Mfg and BancFirst
Can any of the company-specific risk be diversified away by investing in both Espey Mfg 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 Espey Mfg and BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and BancFirst, you can compare the effects of market volatilities on Espey Mfg 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 Espey Mfg with a short position of BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and BancFirst.
Diversification Opportunities for Espey Mfg and BancFirst
Very good diversification
The 3 months correlation between Espey and BancFirst is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Espey Mfg 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 Espey Mfg Electronics 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 Espey Mfg i.e., Espey Mfg and BancFirst go up and down completely randomly.
Pair Corralation between Espey Mfg and BancFirst
Considering the 90-day investment horizon Espey Mfg Electronics is expected to under-perform the BancFirst. But the stock apears to be less risky and, when comparing its historical volatility, Espey Mfg Electronics is 1.46 times less risky than BancFirst. The stock trades about -0.31 of its potential returns per unit of risk. The BancFirst is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8,480 in BancFirst on January 26, 2024 and sell it today you would earn a total of 677.00 from holding BancFirst or generate 7.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Espey Mfg Electronics vs. BancFirst
Performance |
Timeline |
Espey Mfg Electronics |
BancFirst |
Espey Mfg and BancFirst Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Espey Mfg and BancFirst
The main advantage of trading using opposite Espey Mfg and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg 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.Espey Mfg vs. Solid Power | Espey Mfg vs. Enovix Corp | Espey Mfg vs. Microvast Holdings | Espey Mfg vs. LiCycle Holdings Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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