Correlation Between BancFirst and BankUnited

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

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

Diversification Opportunities for BancFirst and BankUnited

0.86

Correlation Coefficient

BancFirst  BankUnited

Very poor diversification

The 3 months correlation between BancFirst and BankUnited is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BancFirst and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited and BancFirst 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 are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of BancFirst i.e., BancFirst and BankUnited go up and down completely randomly.

Pair Corralation between BancFirst and BankUnited

Given the investment horizon of 90 days BancFirst is expected to generate 3.65 times less return on investment than BankUnited. But when comparing it to its historical volatility, BancFirst is 1.16 times less risky than BankUnited. It trades about 0.03 of its potential returns per unit of risk. BankUnited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,303  in BankUnited on May 6, 2025 and sell it today you would earn a total of  272.00  from holding BankUnited or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

BancFirst  vs.  BankUnited

BancFirst

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BancFirst are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BancFirst is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

BankUnited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, BankUnited may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with BancFirst and BankUnited

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

The idea behind BancFirst and BankUnited 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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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.