Correlation Between Peapack Gladstone and CrossFirst Bankshares

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

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

Diversification Opportunities for Peapack Gladstone and CrossFirst Bankshares

0.51

Correlation Coefficient

Peapack Gladstone  CrossFirst Bankshares

Very weak diversification

The 3 months correlation between Peapack and CrossFirst is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Peapack Gladstone Financial and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and Peapack Gladstone 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 Peapack Gladstone Financial 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 Peapack Gladstone i.e., Peapack Gladstone and CrossFirst Bankshares go up and down completely randomly.

Pair Corralation between Peapack Gladstone and CrossFirst Bankshares

Considering the 90-day investment horizon Peapack Gladstone Financial is expected to generate 1.17 times more return on investment than CrossFirst Bankshares. However, Peapack Gladstone is 1.17 times more volatile than CrossFirst Bankshares. It trades about 0.2 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about 0.02 per unit of risk. If you would invest  2,580  in Peapack Gladstone Financial on September 12, 2024 and sell it today you would earn a total of  1,031  from holding Peapack Gladstone Financial or generate 39.96% return on investment over 90 days.

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

Peapack Gladstone Financial  vs.  CrossFirst Bankshares

Peapack Gladstone

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peapack Gladstone Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Peapack Gladstone exhibited 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 Peapack Gladstone and CrossFirst Bankshares

The main advantage of trading using opposite Peapack Gladstone and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peapack Gladstone 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 Peapack Gladstone Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.