Correlation Between CrossFirst Bankshares and First Bancorp
Can any of the company-specific risk be diversified away by investing in both CrossFirst Bankshares 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 CrossFirst Bankshares and First Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CrossFirst Bankshares and First Bancorp, you can compare the effects of market volatilities on CrossFirst Bankshares 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 CrossFirst Bankshares with a short position of First Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrossFirst Bankshares and First Bancorp.
Diversification Opportunities for CrossFirst Bankshares and First Bancorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CrossFirst and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp and CrossFirst Bankshares 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 CrossFirst Bankshares 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 CrossFirst Bankshares i.e., CrossFirst Bankshares and First Bancorp go up and down completely randomly.
Pair Corralation between CrossFirst Bankshares and First Bancorp
Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 1.22 times less return on investment than First Bancorp. In addition to that, CrossFirst Bankshares is 1.13 times more volatile than First Bancorp. It trades about 0.08 of its total potential returns per unit of risk. First Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 1,034 in First Bancorp on August 29, 2024 and sell it today you would earn a total of 1,092 from holding First Bancorp or generate 105.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CrossFirst Bankshares vs. First Bancorp
Performance |
| Timeline |
| CrossFirst Bankshares |
| First Bancorp |
CrossFirst Bankshares and First Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CrossFirst Bankshares and First Bancorp
The main advantage of trading using opposite CrossFirst Bankshares and First Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrossFirst Bankshares 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.| CrossFirst Bankshares vs. Home Bancorp | CrossFirst Bankshares vs. Great Southern Bancorp | CrossFirst Bankshares vs. Finward Bancorp | CrossFirst Bankshares vs. Community West Bancshares |
| First Bancorp vs. Franklin Financial Services | First Bancorp vs. National Bank Holdings | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. Finward 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 the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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