Correlation Between Affinity Bancshares and Coastal Financial

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

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

Diversification Opportunities for Affinity Bancshares and Coastal Financial

-0.12

Correlation Coefficient

Affinity Bancshares  Coastal Financial

Good diversification

The 3 months correlation between Affinity and Coastal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Coastal Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Financial Corp and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with Coastal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Financial Corp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Coastal Financial go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Coastal Financial

Given the investment horizon of 90 days Affinity Bancshares is expected to under-perform the Coastal Financial. In addition to that, Affinity Bancshares is 1.09 times more volatile than Coastal Financial Corp. It trades about -0.06 of its total potential returns per unit of risk. Coastal Financial Corp is currently generating about 0.04 per unit of volatility. If you would invest  8,598  in Coastal Financial Corp on December 29, 2024 and sell it today you would earn a total of  441.00  from holding Coastal Financial Corp or generate 5.13% return on investment over 90 days.

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

Affinity Bancshares  vs.  Coastal Financial Corp

Affinity Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Coastal Financial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Coastal Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Affinity Bancshares and Coastal Financial

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

The idea behind Affinity Bancshares and Coastal Financial Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.