Correlation Between Bridgewater Bancshares and Coastal Financial
Can any of the company-specific risk be diversified away by investing in both Bridgewater Bancshares and Coastal 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 Bridgewater Bancshares and Coastal Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgewater Bancshares and Coastal Financial Corp, you can compare the effects of market volatilities on Bridgewater Bancshares and Coastal 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 Bridgewater Bancshares with a short position of Coastal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Coastal Financial.
Diversification Opportunities for Bridgewater Bancshares and Coastal Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bridgewater and Coastal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares and Coastal Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Financial Corp and Bridgewater Bancshares 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 Bridgewater Bancshares are associated (or correlated) with Coastal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Financial Corp has no effect on the direction of Bridgewater Bancshares i.e., Bridgewater Bancshares and Coastal Financial go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and Coastal Financial
Considering the 90-day investment horizon Bridgewater Bancshares is expected to generate 1.67 times less return on investment than Coastal Financial. But when comparing it to its historical volatility, Bridgewater Bancshares is 1.06 times less risky than Coastal Financial. It trades about 0.19 of its potential returns per unit of risk. Coastal Financial Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,688 in Coastal Financial Corp on January 26, 2024 and sell it today you would earn a total of 455.00 from holding Coastal Financial Corp or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgewater Bancshares vs. Coastal Financial Corp
Performance |
| Timeline |
| Bridgewater Bancshares |
| Coastal Financial Corp |
Bridgewater Bancshares and Coastal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgewater Bancshares and Coastal Financial
The main advantage of trading using opposite Bridgewater Bancshares and Coastal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater Bancshares position performs unexpectedly, Coastal 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 Coastal Financial will offset losses from the drop in Coastal Financial's long position.| Bridgewater Bancshares vs. HMN Financial | Bridgewater Bancshares vs. Home Federal Bancorp | Bridgewater Bancshares vs. First Financial Northwest | Bridgewater Bancshares vs. First Northwest Bancorp |
| Coastal Financial vs. Affinity Bancshares | Coastal Financial vs. HMN Financial | Coastal Financial vs. Home Federal Bancorp | Coastal Financial vs. First Business Financial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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