Correlation Between Raiffeisen Bank and BancFirst

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

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

Diversification Opportunities for Raiffeisen Bank and BancFirst

0.02

Correlation Coefficient

Raiffeisen Bank  BancFirst

Significant diversification

The 3 months correlation between Raiffeisen and BancFirst is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Raiffeisen Bank International and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Raiffeisen Bank 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 Raiffeisen Bank International 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 Raiffeisen Bank i.e., Raiffeisen Bank and BancFirst go up and down completely randomly.

Pair Corralation between Raiffeisen Bank and BancFirst

Assuming the 90 days horizon Raiffeisen Bank is expected to generate 2.64 times less return on investment than BancFirst. In addition to that, Raiffeisen Bank is 1.3 times more volatile than BancFirst. It trades about 0.03 of its total potential returns per unit of risk. BancFirst is currently generating about 0.09 per unit of volatility. If you would invest  10,434  in BancFirst on September 25, 2024 and sell it today you would earn a total of  1,570  from holding BancFirst or generate 15.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Raiffeisen Bank International  vs.  BancFirst

Raiffeisen Bank Inte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Raiffeisen Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BancFirst

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, BancFirst reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raiffeisen Bank and BancFirst

The main advantage of trading using opposite Raiffeisen Bank and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raiffeisen Bank 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 Raiffeisen Bank International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.