Correlation Between CrossFirst Bankshares and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both CrossFirst Bankshares and Heritage Financial 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 Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CrossFirst Bankshares and Heritage Financial, you can compare the effects of market volatilities on CrossFirst Bankshares and Heritage Financial 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 Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrossFirst Bankshares and Heritage Financial.
Diversification Opportunities for CrossFirst Bankshares and Heritage Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CrossFirst and Heritage is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial 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 Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and Heritage Financial go up and down completely randomly.
Pair Corralation between CrossFirst Bankshares and Heritage Financial
Considering the 90-day investment horizon CrossFirst Bankshares is expected to under-perform the Heritage Financial. But the stock apears to be less risky and, when comparing its historical volatility, CrossFirst Bankshares is 1.05 times less risky than Heritage Financial. The stock trades about 0.0 of its potential returns per unit of risk. The Heritage Financial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,166 in Heritage Financial on September 14, 2024 and sell it today you would earn a total of 462.00 from holding Heritage Financial or generate 21.33% 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. Heritage Financial
Performance |
Timeline |
CrossFirst Bankshares |
Heritage Financial |
CrossFirst Bankshares and Heritage Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CrossFirst Bankshares and Heritage Financial
The main advantage of trading using opposite CrossFirst Bankshares and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrossFirst Bankshares position performs unexpectedly, Heritage Financial 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 Heritage Financial will offset losses from the drop in Heritage Financial'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 |
Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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