Correlation Between CrossFirst Bankshares and Lake Shore

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

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

Diversification Opportunities for CrossFirst Bankshares and Lake Shore

-0.05

Correlation Coefficient

CrossFirst Bankshares  Lake Shore

Good diversification

The 3 months correlation between CrossFirst and Lake is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CrossFirst Bankshares and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore 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 Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of CrossFirst Bankshares i.e., CrossFirst Bankshares and Lake Shore go up and down completely randomly.

Pair Corralation between CrossFirst Bankshares and Lake Shore

Considering the 90-day investment horizon CrossFirst Bankshares is expected to generate 2.55 times less return on investment than Lake Shore. In addition to that, CrossFirst Bankshares is 1.35 times more volatile than Lake Shore Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Lake Shore Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  1,268  in Lake Shore Bancorp on September 13, 2024 and sell it today you would earn a total of  76.00  from holding Lake Shore Bancorp or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

CrossFirst Bankshares  vs.  Lake Shore 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.

Lake Shore Bancorp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Shore Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Lake Shore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CrossFirst Bankshares and Lake Shore

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

The idea behind CrossFirst Bankshares and Lake Shore 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.