Correlation Between Brookline Bancorp and CrossFirst Bankshares

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

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

Diversification Opportunities for Brookline Bancorp and CrossFirst Bankshares

0.64

Correlation Coefficient

Brookline Bancorp  CrossFirst Bankshares

Poor diversification

The 3 months correlation between Brookline and CrossFirst is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Brookline Bancorp and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares and Brookline Bancorp 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 Brookline Bancorp 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 Brookline Bancorp i.e., Brookline Bancorp and CrossFirst Bankshares go up and down completely randomly.

Pair Corralation between Brookline Bancorp and CrossFirst Bankshares

Given the investment horizon of 90 days Brookline Bancorp is expected to generate 0.87 times more return on investment than CrossFirst Bankshares. However, Brookline Bancorp is 1.15 times less risky than CrossFirst Bankshares. It trades about 0.18 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about 0.0 per unit of risk. If you would invest  1,002  in Brookline Bancorp on September 17, 2024 and sell it today you would earn a total of  254.00  from holding Brookline Bancorp or generate 25.35% return on investment over 90 days.

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

Brookline Bancorp  vs.  CrossFirst Bankshares

Brookline Bancorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookline Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Brookline Bancorp 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 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 Brookline Bancorp and CrossFirst Bankshares

The main advantage of trading using opposite Brookline Bancorp and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookline Bancorp 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 Brookline Bancorp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..