Correlation Between LINKBANCORP and CrossFirst Bankshares

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

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

Diversification Opportunities for LINKBANCORP and CrossFirst Bankshares

0.46

Correlation Coefficient

LINKBANCORP  CrossFirst Bankshares

Very weak diversification

The 3 months correlation between LINKBANCORP and CrossFirst is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP i.e., LINKBANCORP and CrossFirst Bankshares go up and down completely randomly.

Pair Corralation between LINKBANCORP and CrossFirst Bankshares

Given the investment horizon of 90 days LINKBANCORP is expected to generate 0.86 times more return on investment than CrossFirst Bankshares. However, LINKBANCORP is 1.16 times less risky than CrossFirst Bankshares. It trades about 0.17 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about 0.02 per unit of risk. If you would invest  609.00  in LINKBANCORP on September 4, 2024 and sell it today you would earn a total of  145.00  from holding LINKBANCORP or generate 23.81% return on investment over 90 days.

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

LINKBANCORP  vs.  CrossFirst Bankshares

LINKBANCORP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

CrossFirst Bankshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CrossFirst Bankshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with LINKBANCORP and CrossFirst Bankshares

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

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 Valuation module to check real value of public entities based on technical and fundamental data.