Correlation Between Amazon and Bancfirst Corp

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Can any of the company-specific risk be diversified away by investing in both Amazon and Bancfirst Corp 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 Corp 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 Corp, you can compare the effects of market volatilities on Amazon and Bancfirst Corp 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 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Bancfirst Corp.

Diversification Opportunities for Amazon and Bancfirst Corp

  Correlation Coefficient

Modest diversification

The 3 months correlation between Amazon and Bancfirst is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bancfirst Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancfirst Corp 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancfirst Corp has no effect on the direction of Amazon i.e., Amazon and Bancfirst Corp go up and down completely randomly.

Pair Corralation between Amazon and Bancfirst Corp

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Bancfirst Corp. In addition to that, Amazon is 1.31 times more volatile than Bancfirst Corp. It trades about -0.03 of its total potential returns per unit of risk. Bancfirst Corp is currently generating about 0.07 per unit of volatility. If you would invest  5,651  in Bancfirst Corp on August 29, 2022 and sell it today you would earn a total of  4,718  from holding Bancfirst Corp or generate 83.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Amazon Inc  vs.  Bancfirst Corp

 Performance (%) 
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Bancfirst Corp 
Bancfirst Performance
0 of 100
Over the last 90 days Bancfirst Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bancfirst Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bancfirst Price Channel

Amazon and Bancfirst Corp Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and Bancfirst Corp

The main advantage of trading using opposite Amazon and Bancfirst Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Bancfirst Corp 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 Corp will offset losses from the drop in Bancfirst Corp's long position.
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The idea behind Amazon Inc and Bancfirst Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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