Correlation Between Coastal Financial and CF Bankshares
Can any of the company-specific risk be diversified away by investing in both Coastal Financial and CF Bankshares 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 Financial and CF Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coastal Financial Corp and CF Bankshares, you can compare the effects of market volatilities on Coastal Financial and CF Bankshares 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 Financial with a short position of CF Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Financial and CF Bankshares.
Diversification Opportunities for Coastal Financial and CF Bankshares
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Coastal and CFBK is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Financial Corp and CF Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Bankshares and Coastal 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 Coastal Financial Corp are associated (or correlated) with CF Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Bankshares has no effect on the direction of Coastal Financial i.e., Coastal Financial and CF Bankshares go up and down completely randomly.
Pair Corralation between Coastal Financial and CF Bankshares
Considering the 90-day investment horizon Coastal Financial Corp is expected to generate 1.03 times more return on investment than CF Bankshares. However, Coastal Financial is 1.03 times more volatile than CF Bankshares. It trades about 0.33 of its potential returns per unit of risk. CF Bankshares is currently generating about 0.16 per unit of risk. If you would invest 6,363 in Coastal Financial Corp on August 29, 2024 and sell it today you would earn a total of 1,367 from holding Coastal Financial Corp or generate 21.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coastal Financial Corp vs. CF Bankshares
Performance |
| Timeline |
| Coastal Financial Corp |
| CF Bankshares |
Coastal Financial and CF Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Financial and CF Bankshares
The main advantage of trading using opposite Coastal Financial and CF Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Financial position performs unexpectedly, CF Bankshares 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 CF Bankshares will offset losses from the drop in CF Bankshares' long position.| Coastal Financial vs. Fifth Third Bancorp | Coastal Financial vs. Huntington Bancshares Incorporated | Coastal Financial vs. MT Bank |
| CF Bankshares vs. Magyar Bancorp | CF Bankshares vs. Home Federal Bancorp | CF Bankshares vs. Community West Bancshares | CF Bankshares vs. First Financial Northwest |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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