Correlation Between Coastal Carolina and BEO Bancorp
Can any of the company-specific risk be diversified away by investing in both Coastal Carolina and BEO 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 Carolina and BEO Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coastal Carolina Bancshares and BEO Bancorp, you can compare the effects of market volatilities on Coastal Carolina and BEO 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 Carolina with a short position of BEO Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Carolina and BEO Bancorp.
Diversification Opportunities for Coastal Carolina and BEO Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coastal and BEO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and BEO Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEO Bancorp and Coastal Carolina 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 Carolina Bancshares are associated (or correlated) with BEO Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEO Bancorp has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and BEO Bancorp go up and down completely randomly.
Pair Corralation between Coastal Carolina and BEO Bancorp
Given the investment horizon of 90 days Coastal Carolina Bancshares is expected to under-perform the BEO Bancorp. But the otc stock apears to be less risky and, when comparing its historical volatility, Coastal Carolina Bancshares is 2.67 times less risky than BEO Bancorp. The otc stock trades about 0.0 of its potential returns per unit of risk. The BEO Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,050 in BEO Bancorp on October 5, 2024 and sell it today you would earn a total of 3,646 from holding BEO Bancorp or generate 90.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 87.65% |
Values | Daily Returns |
Coastal Carolina Bancshares vs. BEO Bancorp
Performance |
Timeline |
Coastal Carolina Ban |
BEO Bancorp |
Coastal Carolina and BEO Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coastal Carolina and BEO Bancorp
The main advantage of trading using opposite Coastal Carolina and BEO Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Carolina position performs unexpectedly, BEO 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 BEO Bancorp will offset losses from the drop in BEO Bancorp's long position.Coastal Carolina vs. First Bankers Trustshares | Coastal Carolina vs. Greenville Federal Financial | Coastal Carolina vs. First Ottawa Bancshares | Coastal Carolina vs. Citizens Bancorp Investment |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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