Correlation Between CrossFirst Bankshares and Woori Financial

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

Diversification Opportunities for CrossFirst Bankshares and Woori Financial

0.01

Correlation Coefficient

CrossFirst Bankshares  Woori Financial

Significant diversification

The 3 months correlation between CrossFirst and Woori is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and Woori Financial go up and down completely randomly.

Pair Corralation between CrossFirst Bankshares and Woori Financial

Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 3.31 times more return on investment than Woori Financial. However, CrossFirst Bankshares is 3.31 times more volatile than Woori Financial Group. It trades about 0.15 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.28 per unit of risk. If you would invest  1,570  in CrossFirst Bankshares on September 1, 2024 and sell it today you would earn a total of  161.00  from holding CrossFirst Bankshares or generate 10.25% return on investment over 90 days.

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

CrossFirst Bankshares  vs.  Woori Financial Group

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.

Woori Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Woori Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CrossFirst Bankshares and Woori Financial

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

The idea behind CrossFirst Bankshares and Woori Financial Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.