Correlation Between Grupo Financiero and CrossFirst Bankshares

Can any of the company-specific risk be diversified away by investing in both Grupo Financiero 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 Grupo Financiero and CrossFirst Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Financiero Galicia and CrossFirst Bankshares, you can compare the effects of market volatilities on Grupo Financiero 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 Grupo Financiero with a short position of CrossFirst Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and CrossFirst Bankshares.

Diversification Opportunities for Grupo Financiero and CrossFirst Bankshares

0.38

Correlation Coefficient

Grupo Financiero  CrossFirst Bankshares

Weak diversification

The 3 months correlation between Grupo and CrossFirst is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and Grupo Financiero 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 Grupo Financiero Galicia 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 Grupo Financiero i.e., Grupo Financiero and CrossFirst Bankshares go up and down completely randomly.

Pair Corralation between Grupo Financiero and CrossFirst Bankshares

Given the investment horizon of 90 days Grupo Financiero Galicia is expected to generate 2.05 times more return on investment than CrossFirst Bankshares. However, Grupo Financiero is 2.05 times more volatile than CrossFirst Bankshares. It trades about 0.12 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about -0.22 per unit of risk. If you would invest  5,766  in Grupo Financiero Galicia on September 21, 2024 and sell it today you would earn a total of  481.00  from holding Grupo Financiero Galicia or generate 8.34% return on investment over 90 days.

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

Grupo Financiero Galicia  vs.  CrossFirst Bankshares

Grupo Financiero Galicia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Galicia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Grupo Financiero disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Grupo Financiero and CrossFirst Bankshares

The main advantage of trading using opposite Grupo Financiero and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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.

The idea behind Grupo Financiero Galicia and CrossFirst Bankshares 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.