Correlation Between Mountain Commerce and CoastalSouth Bancshares

Can any of the company-specific risk be diversified away by investing in both Mountain Commerce and CoastalSouth Bancshares 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 Mountain Commerce and CoastalSouth Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mountain Commerce and CoastalSouth Bancshares

0.36

Correlation Coefficient

Mountain Commerce  CoastalSouth Bancshares

Weak diversification

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

Pair Corralation between Mountain Commerce and CoastalSouth Bancshares

Given the investment horizon of 90 days Mountain Commerce is expected to generate 30.94 times less return on investment than CoastalSouth Bancshares. But when comparing it to its historical volatility, Mountain Commerce Bancorp is 1.17 times less risky than CoastalSouth Bancshares. It trades about 0.0 of its potential returns per unit of risk. CoastalSouth Bancshares is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,000  in CoastalSouth Bancshares on September 3, 2024 and sell it today you would earn a total of  125.00  from holding CoastalSouth Bancshares or generate 6.25% return on investment over 90 days.

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

Mountain Commerce Bancorp  vs.  CoastalSouth Bancshares

Mountain Commerce Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Commerce Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Mountain Commerce is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CoastalSouth Bancshares

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoastalSouth Bancshares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CoastalSouth Bancshares is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mountain Commerce and CoastalSouth Bancshares

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

The idea behind Mountain Commerce Bancorp and CoastalSouth 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.