Correlation Between Coastal Financial and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Coastal Financial and NBT Bancorp 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 NBT Bancorp 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 NBT Bancorp, you can compare the effects of market volatilities on Coastal Financial and NBT Bancorp 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 NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Financial and NBT Bancorp.
Diversification Opportunities for Coastal Financial and NBT Bancorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coastal and NBT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Financial Corp and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp 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 NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Coastal Financial i.e., Coastal Financial and NBT Bancorp go up and down completely randomly.
Pair Corralation between Coastal Financial and NBT Bancorp
Considering the 90-day investment horizon Coastal Financial Corp is expected to generate 1.04 times more return on investment than NBT Bancorp. However, Coastal Financial is 1.04 times more volatile than NBT Bancorp. It trades about 0.35 of its potential returns per unit of risk. NBT Bancorp is currently generating about 0.19 per unit of risk. If you would invest 5,998 in Coastal Financial Corp on August 25, 2024 and sell it today you would earn a total of 1,658 from holding Coastal Financial Corp or generate 27.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coastal Financial Corp vs. NBT Bancorp
Performance |
| Timeline |
| Coastal Financial Corp |
| NBT Bancorp |
Coastal Financial and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coastal Financial and NBT Bancorp
The main advantage of trading using opposite Coastal Financial and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coastal Financial position performs unexpectedly, NBT Bancorp 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 NBT Bancorp will offset losses from the drop in NBT Bancorp'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 |
| NBT Bancorp vs. Oak Valley Bancorp | NBT Bancorp vs. Home Federal Bancorp | NBT Bancorp vs. Finward Bancorp | NBT Bancorp vs. Community West Bancshares |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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