Correlation Between Coastal Financial and Stellar Bancorp,

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

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

Diversification Opportunities for Coastal Financial and Stellar Bancorp,

0.51

Correlation Coefficient

Coastal Financial  Stellar Bancorp,

Very weak diversification

The 3 months correlation between Coastal and Stellar is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Financial Corp and Stellar Bancorp, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar Bancorp, and Coastal Financial 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 Coastal Financial Corp are associated (or correlated) with Stellar Bancorp,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar Bancorp, has no effect on the direction of Coastal Financial i.e., Coastal Financial and Stellar Bancorp, go up and down completely randomly.

Pair Corralation between Coastal Financial and Stellar Bancorp,

Considering the 90-day investment horizon Coastal Financial Corp is expected to generate 1.68 times more return on investment than Stellar Bancorp,. However, Coastal Financial is 1.68 times more volatile than Stellar Bancorp,. It trades about 0.06 of its potential returns per unit of risk. Stellar Bancorp, is currently generating about 0.0 per unit of risk. If you would invest  8,598  in Coastal Financial Corp on December 28, 2024 and sell it today you would earn a total of  605.00  from holding Coastal Financial Corp or generate 7.04% return on investment over 90 days.

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

Coastal Financial Corp  vs.  Stellar Bancorp,

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 4 (%) 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.

Stellar Bancorp,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar Bancorp, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Stellar Bancorp, is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Coastal Financial and Stellar Bancorp,

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

The idea behind Coastal Financial Corp and Stellar 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.