Correlation Between Grupo Aval and CrossFirst Bankshares
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and CrossFirst Bankshares 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 Grupo Aval and CrossFirst Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and CrossFirst Bankshares, you can compare the effects of market volatilities on Grupo Aval and CrossFirst Bankshares 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 Grupo Aval with a short position of CrossFirst Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and CrossFirst Bankshares.
Diversification Opportunities for Grupo Aval and CrossFirst Bankshares
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grupo and CrossFirst is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and Grupo Aval 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 Grupo Aval are associated (or correlated) with CrossFirst Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CrossFirst Bankshares has no effect on the direction of Grupo Aval i.e., Grupo Aval and CrossFirst Bankshares go up and down completely randomly.
Pair Corralation between Grupo Aval and CrossFirst Bankshares
Given the investment horizon of 90 days Grupo Aval is expected to under-perform the CrossFirst Bankshares. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Aval is 1.43 times less risky than CrossFirst Bankshares. The stock trades about -0.07 of its potential returns per unit of risk. The CrossFirst Bankshares is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,295 in CrossFirst Bankshares on August 30, 2024 and sell it today you would earn a total of 462.00 from holding CrossFirst Bankshares or generate 35.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. CrossFirst Bankshares
Performance |
| Timeline |
| Grupo Aval |
| CrossFirst Bankshares |
Grupo Aval and CrossFirst Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and CrossFirst Bankshares
The main advantage of trading using opposite Grupo Aval and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, CrossFirst Bankshares 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 CrossFirst Bankshares will offset losses from the drop in CrossFirst Bankshares' long position.| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
| CrossFirst Bankshares vs. Home Bancorp | CrossFirst Bankshares vs. Great Southern Bancorp | CrossFirst Bankshares vs. Finward Bancorp | CrossFirst Bankshares vs. Community West Bancshares |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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