Correlation Between Eastern Bankshares and CrossFirst Bankshares
Can any of the company-specific risk be diversified away by investing in both Eastern Bankshares 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 Eastern Bankshares and CrossFirst Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Bankshares and CrossFirst Bankshares, you can compare the effects of market volatilities on Eastern Bankshares 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 Eastern Bankshares with a short position of CrossFirst Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Bankshares and CrossFirst Bankshares.
Diversification Opportunities for Eastern Bankshares and CrossFirst Bankshares
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and CrossFirst is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Bankshares and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and Eastern 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 Eastern Bankshares 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 Eastern Bankshares i.e., Eastern Bankshares and CrossFirst Bankshares go up and down completely randomly.
Pair Corralation between Eastern Bankshares and CrossFirst Bankshares
Considering the 90-day investment horizon Eastern Bankshares is expected to generate 1.08 times more return on investment than CrossFirst Bankshares. However, Eastern Bankshares is 1.08 times more volatile than CrossFirst Bankshares. It trades about 0.03 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about 0.03 per unit of risk. If you would invest 1,501 in Eastern Bankshares on September 1, 2024 and sell it today you would earn a total of 363.00 from holding Eastern Bankshares or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Bankshares vs. CrossFirst Bankshares
Performance |
| Timeline |
| Eastern Bankshares |
| CrossFirst Bankshares |
Eastern Bankshares and CrossFirst Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Bankshares and CrossFirst Bankshares
The main advantage of trading using opposite Eastern Bankshares and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Bankshares 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.| Eastern Bankshares vs. Western New England | Eastern Bankshares vs. Northeast Community Bancorp | Eastern Bankshares vs. Independent Bank | Eastern Bankshares vs. The First Bancshares, |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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