Correlation Between Third Coast and Union Bankshares

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

Diversification Opportunities for Third Coast and Union Bankshares

-0.5

Correlation Coefficient

Third Coast  Union Bankshares

Very good diversification

The 3 months correlation between Third and Union is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Third Coast Bancshares and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares 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 Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of Third Coast i.e., Third Coast and Union Bankshares go up and down completely randomly.

Pair Corralation between Third Coast and Union Bankshares

Given the investment horizon of 90 days Third Coast Bancshares is expected to generate 0.85 times more return on investment than Union Bankshares. However, Third Coast Bancshares is 1.17 times less risky than Union Bankshares. It trades about 0.2 of its potential returns per unit of risk. Union Bankshares is currently generating about -0.12 per unit of risk. If you would invest  3,051  in Third Coast Bancshares on May 2, 2025 and sell it today you would earn a total of  788.00  from holding Third Coast Bancshares or generate 25.83% return on investment over 90 days.

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

Third Coast Bancshares  vs.  Union Bankshares

Third Coast Bancshares

Risk-Adjusted Performance

Solid

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.

Union Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Third Coast and Union Bankshares

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

The idea behind Third Coast Bancshares and Union Bankshares 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.