Correlation Between Coastal Carolina and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both Coastal Carolina and Citizens 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 Coastal Carolina and Citizens Financial 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 Citizens Financial Corp, you can compare the effects of market volatilities on Coastal Carolina and Citizens 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 Coastal Carolina with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Carolina and Citizens Financial.

Diversification Opportunities for Coastal Carolina and Citizens Financial

0.85

Correlation Coefficient

Coastal Carolina  Citizens Financial

Very poor diversification

The 3 months correlation between Coastal and Citizens is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and Citizens Financial go up and down completely randomly.

Pair Corralation between Coastal Carolina and Citizens Financial

Given the investment horizon of 90 days Coastal Carolina Bancshares is expected to generate 0.51 times more return on investment than Citizens Financial. However, Coastal Carolina Bancshares is 1.98 times less risky than Citizens Financial. It trades about 0.12 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.06 per unit of risk. If you would invest  1,080  in Coastal Carolina Bancshares on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Coastal Carolina Bancshares or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	83.61%
Values	Daily Returns

Coastal Carolina Bancshares  vs.  Citizens Financial Corp

Coastal Carolina Ban

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Carolina Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Coastal Carolina is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Citizens Financial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Coastal Carolina and Citizens Financial

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

The idea behind Coastal Carolina Bancshares and Citizens 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.