Correlation Between Third Coast and Solvay Bank

Can any of the company-specific risk be diversified away by investing in both Third Coast and Solvay Bank 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 Solvay Bank 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 Solvay Bank Corp, you can compare the effects of market volatilities on Third Coast and Solvay Bank 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 Solvay Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Coast and Solvay Bank.

Diversification Opportunities for Third Coast and Solvay Bank

0.38

Correlation Coefficient

Third Coast  Solvay Bank

Weak diversification

The 3 months correlation between Third and Solvay is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Third Coast Bancshares and Solvay Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay Bank Corp 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 Solvay Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay Bank Corp has no effect on the direction of Third Coast i.e., Third Coast and Solvay Bank go up and down completely randomly.

Pair Corralation between Third Coast and Solvay Bank

Given the investment horizon of 90 days Third Coast Bancshares is expected to generate 1.4 times more return on investment than Solvay Bank. However, Third Coast is 1.4 times more volatile than Solvay Bank Corp. It trades about 0.19 of its potential returns per unit of risk. Solvay Bank Corp is currently generating about -0.02 per unit of risk. If you would invest  3,013  in Third Coast Bancshares on May 3, 2025 and sell it today you would earn a total of  752.00  from holding Third Coast Bancshares or generate 24.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Third Coast Bancshares  vs.  Solvay Bank Corp

Third Coast Bancshares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Third Coast Bancshares are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Third Coast showed solid returns over the last few months and may actually be approaching a breakup point.

Solvay Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solvay Bank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Solvay Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Third Coast and Solvay Bank

The main advantage of trading using opposite Third Coast and Solvay Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Coast position performs unexpectedly, Solvay Bank 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 Solvay Bank will offset losses from the drop in Solvay Bank's long position.

The idea behind Third Coast Bancshares and Solvay Bank Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.