Correlation Between Coastal Carolina and FNB

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

Diversification Opportunities for Coastal Carolina and FNB

-0.09

Correlation Coefficient

Coastal Carolina  FNB

Good diversification

The 3 months correlation between Coastal and FNB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Carolina Bancshares and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc 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 FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of Coastal Carolina i.e., Coastal Carolina and FNB go up and down completely randomly.

Pair Corralation between Coastal Carolina and FNB

Given the investment horizon of 90 days Coastal Carolina is expected to generate 20.68 times less return on investment than FNB. But when comparing it to its historical volatility, Coastal Carolina Bancshares is 5.97 times less risky than FNB. It trades about 0.01 of its potential returns per unit of risk. FNB Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,300  in FNB Inc on October 6, 2024 and sell it today you would earn a total of  45.00  from holding FNB Inc or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.26%
Values	Daily Returns

Coastal Carolina Bancshares  vs.  FNB Inc

Coastal Carolina Ban

Risk-Adjusted Performance

9 of 100

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 uncertain basic indicators, Coastal Carolina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FNB Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FNB Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FNB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coastal Carolina and FNB

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

The idea behind Coastal Carolina Bancshares and FNB Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.