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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OceanFirst and Coastal is 0.72. 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 10.33 times less return on investment than Coastal Carolina. But when comparing it to its historical volatility, OceanFirst Financial Corp is 3.06 times less risky than Coastal Carolina. It trades about 0.11 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Coastal Carolina Bancshares on September 1, 2024 and sell it today you would earn a total of 110.00 from holding Coastal Carolina Bancshares or generate 10.84% 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
Performance |
| Timeline |
| OceanFirst Financial Corp |
| Coastal Carolina Ban |
OceanFirst Financial and Coastal Carolina Volatility Contrast
Predicted Return Density |
| Returns |
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.| OceanFirst Financial vs. KeyCorp | OceanFirst Financial vs. KeyCorp | OceanFirst Financial vs. Fifth Third Bancorp | OceanFirst Financial vs. Citizens Financial Group |
| Coastal Carolina vs. First Bankers Trustshares | Coastal Carolina vs. Greenville Federal Financial | Coastal Carolina vs. First Ottawa Bancshares | Coastal Carolina vs. Citizens Bancorp Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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