Correlation Between CrossFirst Bankshares and ConnectOne Bancorp

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

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

Diversification Opportunities for CrossFirst Bankshares and ConnectOne Bancorp

0.74

Correlation Coefficient

CrossFirst Bankshares  ConnectOne Bancorp

Poor diversification

The 3 months correlation between CrossFirst and ConnectOne is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and ConnectOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConnectOne Bancorp 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 ConnectOne Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConnectOne Bancorp has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and ConnectOne Bancorp go up and down completely randomly.

Pair Corralation between CrossFirst Bankshares and ConnectOne Bancorp

Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 3.65 times less return on investment than ConnectOne Bancorp. But when comparing it to its historical volatility, CrossFirst Bankshares is 1.12 times less risky than ConnectOne Bancorp. It trades about 0.02 of its potential returns per unit of risk. ConnectOne Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,453  in ConnectOne Bancorp on September 13, 2024 and sell it today you would earn a total of  211.00  from holding ConnectOne Bancorp or generate 8.6% return on investment over 90 days.

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

CrossFirst Bankshares  vs.  ConnectOne Bancorp

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.

ConnectOne Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ConnectOne Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ConnectOne Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CrossFirst Bankshares and ConnectOne Bancorp

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

The idea behind CrossFirst Bankshares and ConnectOne Bancorp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.