Correlation Between Bancfirst Corp and First Bancorp

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

Diversification Opportunities for Bancfirst Corp and First Bancorp

0.87
  Correlation Coefficient

Very poor diversification

The 24 months correlation between Bancfirst and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bancfirst Corp and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and Bancfirst Corp 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 Corp are associated (or correlated) with First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Bancfirst Corp i.e., Bancfirst Corp and First Bancorp go up and down completely randomly.

Pair Corralation between Bancfirst Corp and First Bancorp

Given the investment horizon of 90 days Bancfirst Corp is expected to generate 1.17 times more return on investment than First Bancorp. However, Bancfirst Corp is 1.17 times more volatile than First Bancorp. It trades about 0.08 of its potential returns per unit of risk. First Bancorp is currently generating about 0.05 per unit of risk. If you would invest  4,189  in Bancfirst Corp on February 26, 2022 and sell it today you would earn a total of  4,816  from holding Bancfirst Corp or generate 114.97% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Bancfirst Corp  vs.  First Bancorp

 Performance (%) 
      Timeline 
Bancfirst Corp 
Bancfirst Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bancfirst Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Bancfirst Corp may actually be approaching a critical reversion point that can send shares even higher in June 2022.

Bancfirst Price Channel

First Bancorp 
First Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, First Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Price Channel

Bancfirst Corp and First Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Bancfirst Corp and First Bancorp

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

Bancfirst Corp

Pair trading matchups for Bancfirst Corp

The idea behind Bancfirst Corp and First 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.

First Bancorp

Pair trading matchups for 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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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