Correlation Between Coastal Financial and Century Financial
Can any of the company-specific risk be diversified away by investing in both Coastal Financial and Century Financial 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 Century Financial 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 Century Financial Corp, you can compare the effects of market volatilities on Coastal Financial and Century Financial 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 Century Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Financial and Century Financial.
Diversification Opportunities for Coastal Financial and Century Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coastal and Century is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Financial Corp and Century Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Financial Corp 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 Century Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Financial Corp has no effect on the direction of Coastal Financial i.e., Coastal Financial and Century Financial go up and down completely randomly.
Pair Corralation between Coastal Financial and Century Financial
Considering the 90-day investment horizon Coastal Financial is expected to generate 1.09 times less return on investment than Century Financial. But when comparing it to its historical volatility, Coastal Financial Corp is 1.09 times less risky than Century Financial. It trades about 0.04 of its potential returns per unit of risk. Century Financial Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,795 in Century Financial Corp on August 29, 2024 and sell it today you would earn a total of 955.00 from holding Century Financial Corp or generate 34.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 75.81% |
| Values | Daily Returns |
Coastal Financial Corp vs. Century Financial Corp
Performance |
| Timeline |
| Coastal Financial Corp |
| Century Financial Corp |
Coastal Financial and Century Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Financial and Century Financial
The main advantage of trading using opposite Coastal Financial and Century Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Financial position performs unexpectedly, Century Financial 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 Century Financial will offset losses from the drop in Century Financial's long position.| Coastal Financial vs. Affinity Bancshares | Coastal Financial vs. Home Federal Bancorp | Coastal Financial vs. First Business Financial | Coastal Financial vs. Old Point Financial |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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