Correlation Between Third Coast and Southern States
Can any of the company-specific risk be diversified away by investing in both Third Coast and Southern States 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 Third Coast and Southern States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Coast Bancshares and Southern States Bancshares, you can compare the effects of market volatilities on Third Coast and Southern States 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 Third Coast with a short position of Southern States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Coast and Southern States.
Diversification Opportunities for Third Coast and Southern States
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Third and Southern is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Third Coast Bancshares and Southern States Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern States Banc and Third Coast 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 Third Coast Bancshares are associated (or correlated) with Southern States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern States Banc has no effect on the direction of Third Coast i.e., Third Coast and Southern States go up and down completely randomly.
Pair Corralation between Third Coast and Southern States
Given the investment horizon of 90 days Third Coast Bancshares is expected to generate 0.86 times more return on investment than Southern States. However, Third Coast Bancshares is 1.17 times less risky than Southern States. It trades about 0.17 of its potential returns per unit of risk. Southern States Bancshares is currently generating about 0.04 per unit of risk. If you would invest 2,567 in Third Coast Bancshares on November 2, 2024 and sell it today you would earn a total of 1,048 from holding Third Coast Bancshares or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Coast Bancshares vs. Southern States Bancshares
Performance |
| Timeline |
| Third Coast Bancshares |
| Southern States Banc |
Third Coast and Southern States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Coast and Southern States
The main advantage of trading using opposite Third Coast and Southern States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Coast position performs unexpectedly, Southern States 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 Southern States will offset losses from the drop in Southern States' long position.| Third Coast vs. Byline Bancorp | Third Coast vs. Coastal Financial Corp | Third Coast vs. NBT Bancorp | Third Coast vs. Community West Bancshares |
| Southern States vs. Home Federal Bancorp | Southern States vs. Oak Valley Bancorp | Southern States vs. Mainstreet Bank | Southern States vs. Chemung Financial Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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