Correlation Between CrossFirst Bankshares and Home Bancorp

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

Diversification Opportunities for CrossFirst Bankshares and Home Bancorp

0.37

Correlation Coefficient

CrossFirst Bankshares  Home Bancorp

Weak diversification

The 3 months correlation between CrossFirst and Home is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home 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 Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and Home Bancorp go up and down completely randomly.

Pair Corralation between CrossFirst Bankshares and Home Bancorp

Considering the 90-day investment horizon CrossFirst Bankshares is expected to under-perform the Home Bancorp. In addition to that, CrossFirst Bankshares is 1.16 times more volatile than Home Bancorp. It trades about 0.0 of its total potential returns per unit of risk. Home Bancorp is currently generating about 0.14 per unit of volatility. If you would invest  4,256  in Home Bancorp on September 2, 2024 and sell it today you would earn a total of  817.00  from holding Home Bancorp or generate 19.2% return on investment over 90 days.

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

CrossFirst Bankshares  vs.  Home Bancorp

CrossFirst Bankshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CrossFirst Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, CrossFirst Bankshares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Home Bancorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Home Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CrossFirst Bankshares and Home Bancorp

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

The idea behind CrossFirst Bankshares and Home 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.