Correlation Between CrossFirst Bankshares and Finward Bancorp

Can any of the company-specific risk be diversified away by investing in both CrossFirst Bankshares and Finward 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 Finward 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 Finward Bancorp, you can compare the effects of market volatilities on CrossFirst Bankshares and Finward 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 Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrossFirst Bankshares and Finward Bancorp.

Diversification Opportunities for CrossFirst Bankshares and Finward Bancorp

0.54

Correlation Coefficient

CrossFirst Bankshares  Finward Bancorp

Very weak diversification

The 3 months correlation between CrossFirst and Finward is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward 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 Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and Finward Bancorp go up and down completely randomly.

Pair Corralation between CrossFirst Bankshares and Finward Bancorp

Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 1.55 times more return on investment than Finward Bancorp. However, CrossFirst Bankshares is 1.55 times more volatile than Finward Bancorp. It trades about 0.11 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.1 per unit of risk. If you would invest  1,483  in CrossFirst Bankshares on December 2, 2024 and sell it today you would earn a total of  116.00  from holding CrossFirst Bankshares or generate 7.82% return on investment over 90 days.

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

CrossFirst Bankshares  vs.  Finward Bancorp

CrossFirst Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days CrossFirst Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Finward Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finward Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CrossFirst Bankshares and Finward Bancorp

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

The idea behind CrossFirst Bankshares and Finward Bancorp 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 Stocks Directory module to find actively traded stocks across global markets.