Correlation Between OceanFirst Financial and Coastal Carolina

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

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

Diversification Opportunities for OceanFirst Financial and Coastal Carolina

0.77

Correlation Coefficient

OceanFirst Financial  Coastal Carolina

Poor diversification

The 3 months correlation between OceanFirst and Coastal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial Corp 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 OceanFirst Financial 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 OceanFirst Financial Corp 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 OceanFirst Financial i.e., OceanFirst Financial and Coastal Carolina go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Coastal Carolina

Assuming the 90 days horizon OceanFirst Financial is expected to generate 2.6 times less return on investment than Coastal Carolina. But when comparing it to its historical volatility, OceanFirst Financial Corp is 2.95 times less risky than Coastal Carolina. It trades about 0.14 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Coastal Carolina Bancshares on December 30, 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	Significant
Accuracy	100.0%
Values	Daily Returns

OceanFirst Financial Corp  vs.  Coastal Carolina Bancshares

OceanFirst Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, OceanFirst Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with OceanFirst Financial and Coastal Carolina

The main advantage of trading using opposite OceanFirst Financial and Coastal Carolina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst Financial 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 OceanFirst Financial Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.