Correlation Between Regions Financial and BancFirst

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

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

Diversification Opportunities for Regions Financial and BancFirst

-0.18

Correlation Coefficient

Regions Financial  BancFirst

Good diversification

The 3 months correlation between Regions and BancFirst is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Regions Financial 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 Regions Financial 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 Regions Financial i.e., Regions Financial and BancFirst go up and down completely randomly.

Pair Corralation between Regions Financial and BancFirst

Allowing for the 90-day total investment horizon Regions Financial is expected to under-perform the BancFirst. But the stock apears to be less risky and, when comparing its historical volatility, Regions Financial is 1.39 times less risky than BancFirst. The stock trades about -0.16 of its potential returns per unit of risk. The BancFirst is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,772  in BancFirst on January 21, 2024 and sell it today you would earn a total of  156.00  from holding BancFirst or generate 1.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Regions Financial  vs.  BancFirst

Regions Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Regions Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BancFirst

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BancFirst is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Regions Financial and BancFirst

The main advantage of trading using opposite Regions Financial and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial 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.

The idea behind Regions Financial 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.