Correlation Between Virginia National and BOK Financial

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

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

Diversification Opportunities for Virginia National and BOK Financial

0.61

Correlation Coefficient

Virginia National  BOK Financial

Poor diversification

The 3 months correlation between Virginia and BOK is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial and Virginia National 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 Virginia National Bankshares are associated (or correlated) with BOK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOK Financial has no effect on the direction of Virginia National i.e., Virginia National and BOK Financial go up and down completely randomly.

Pair Corralation between Virginia National and BOK Financial

Given the investment horizon of 90 days Virginia National Bankshares is expected to under-perform the BOK Financial. But the stock apears to be less risky and, when comparing its historical volatility, Virginia National Bankshares is 1.23 times less risky than BOK Financial. The stock trades about -0.07 of its potential returns per unit of risk. The BOK Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,780  in BOK Financial on September 26, 2024 and sell it today you would earn a total of  203.00  from holding BOK Financial or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Virginia National Bankshares  vs.  BOK Financial

Virginia National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Virginia National is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BOK Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BOK Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, BOK Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virginia National and BOK Financial

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

The idea behind Virginia National Bankshares and BOK Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.