Correlation Between First Commonwealth and Coastal Carolina

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

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

Diversification Opportunities for First Commonwealth and Coastal Carolina

0.36

Correlation Coefficient

First Commonwealth  Coastal Carolina

Weak diversification

The 3 months correlation between First and Coastal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial and Coastal Carolina Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Carolina Ban and First Commonwealth 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 First Commonwealth Financial are associated (or correlated) with Coastal Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Carolina Ban has no effect on the direction of First Commonwealth i.e., First Commonwealth and Coastal Carolina go up and down completely randomly.

Pair Corralation between First Commonwealth and Coastal Carolina

Considering the 90-day investment horizon First Commonwealth is expected to generate 23.17 times less return on investment than Coastal Carolina. In addition to that, First Commonwealth is 2.61 times more volatile than Coastal Carolina Bancshares. It trades about 0.0 of its total potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.12 per unit of volatility. If you would invest  1,014  in Coastal Carolina Bancshares on October 22, 2024 and sell it today you would earn a total of  77.00  from holding Coastal Carolina Bancshares or generate 7.59% return on investment over 90 days.

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

First Commonwealth Financial  vs.  Coastal Carolina Bancshares

First Commonwealth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Commonwealth Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, First Commonwealth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Coastal Carolina Ban

Risk-Adjusted Performance

9 of 100

Good

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.

Pair Trading with First Commonwealth and Coastal Carolina

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

The idea behind First Commonwealth Financial and Coastal Carolina Bancshares 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.