Finexus Returns & Risk Profile
2026-06-07

Coastal Financial’s Bullish Surge Hides a History of Deep Drawdowns

Three risk flags and persistent underperformance raise questions about upside durability
CCB Coastal Financial Corporation
In this report
01
Returns Overview
Period returns, alpha, cumulative performance, distributions
P. 2-3
→
02
Volatility Analysis
Annualized volatility, downside deviation, drawdowns
P. 4-5
→
03
Beta & Correlation
Trailing, upside, downside beta, systematic risk
P. 6-7
→
04
Risk-Adjusted Returns
Sharpe, Sortino, Calmar, Information, Treynor
P. 8-9
→
05
Market Regime Analysis
Bull/bear behavior, capture ratios
P. 10-11
→
06
Investment Highlights & Risk Summary
Executive summary, risk flags, rankings
P. 12-13
→
For informational purposes only — not investment advice. See full disclaimer at end.
Returns Overview
Coastal Financial Corporation (CCB) — Return Performance
Coastal Financial Corporation (CCB) has exhibited a pronounced divergence between short‑term and long‑term performance. Over the past month the stock fell 1.32% while still delivering a modest 1.27% excess return versus its sector ETF, but over the trailing three‑month period it underperformed by 20.8% relative to the sector (−7.7% vs sector −13.64%). The negative gap widened dramatically in the six‑month horizon, with CCB down 38.7% and lagging the sector by 34.19%, and persisted through the one‑year window where it posted a 27.49% loss versus a 28.05% sector underperformance. By contrast, the longer horizons show a reversal: over two years CCB generated 52.23% total return, outpacing the sector by 22.23%; over three years it delivered 86.56% (+25.24% vs sector); and over five years it posted 145.94%, exceeding the sector benchmark by 91.8%. This pattern indicates that recent market pressure has suppressed short‑term returns, while the company’s fundamentals have supported strong multi‑year outperformance.
Period Returns vs S&P 500 & XLF
Monthly Returns Heatmap
CCB
CCB produced positive alpha in the one‑month (+1.27%) and two‑year (+22.23%) windows, but generated significant negative alpha in the three‑month (−20.8%), six‑month (−46.57%) and one‑year (−46.49%) periods, reflecting short‑term weakness relative to its sector. The turnaround from deep underperformance to robust outperformance over longer horizons highlights a potential mean‑reversion opportunity for investors with a longer investment horizon.
Returns Overview
Coastal Financial Corporation (CCB) — Return Charts
Volatility Analysis
Coastal Financial Corporation (CCB) — Volatility Profile
Coastal Financial Corporation (CCB) exhibits markedly higher volatility than the broader market, with an annualized volatility of 47.92% versus the S&P 500's 17.78%, indicating roughly 2.7 times the price fluctuation intensity. The downside risk profile is pronounced: a downside deviation of 35.83% reflects substantial loss‑side variability, and the historical maximum drawdown of -50.22% persisted for approximately nine months (January 30 2020 to November 9 2020), underscoring vulnerability during market stress. While short‑term volatility has eased—60‑day vol at 39.29% is below the 252‑day average of 41.68%—the long‑run risk metrics remain elevated relative to benchmark expectations.
Volatility Metrics
CCB
The company's annualized volatility of 47.92% dwarfs the S&P 500's 17.78%, translating into a beta-like exposure roughly 2.7 times that of the market, which amplifies both upside potential and downside risk. Downside deviation stands at 35.83%, indicating that loss‑oriented swings are severe; combined with a historic max drawdown of -50.22% over a 284‑day period, investors should anticipate sizable equity erosion in adverse environments. However, the recent 60‑day volatility of 39.29% falling below the 252‑day average suggests a temporary moderation in price swings, though it remains well above market norms.
  • CCB's annualized volatility is about 2.7× higher than the S&P 500.
  • Downside deviation of 35.83% signals strong loss‑side variability.
  • Maximum historical drawdown of -50.22% lasted roughly nine months, highlighting deep and prolonged downside exposure.
  • Short‑term (60‑day) volatility is currently lower than the long‑term (252‑day) average, indicating a brief easing of price swings.
Positive Characteristics
  • The recent decline in 60‑day volatility below the 252‑day level suggests a short‑run reduction in market turbulence.
  • Despite high overall risk, the moderation may provide a window for risk‑adjusted entry points if downside expectations are managed.
Volatility Analysis
Coastal Financial Corporation (CCB) — Volatility & Drawdown Charts
Beta & Correlation
Coastal Financial Corporation (CCB) — Beta Profile
Coastal Financial Corporation (CCB) exhibits a trailing market beta of 1.221, placing it just above the aggressive threshold (>1.2). This indicates that the stock tends to amplify S&P 500 movements, delivering roughly 22% more volatility than the broad market on average. The upside beta of 1.381 versus downside beta of 1.263 reveals a modest asymmetry: CCB is slightly more sensitive when the market rises, suggesting potential for higher gains in bullish regimes but also marginally lower protection during declines. The R‑squared of 0.249 and correlation of 0.499 with the S&P 500 mean that only about one‑quarter of CCB’s price variation is explained by overall market moves; the remaining three‑quarters stem from idiosyncratic factors. When benchmarked against its sector (XLF), the sector beta of 1.189 and sector correlation of 0.584 show that a larger share of risk originates from financial‑services dynamics, yet still leaves substantial company‑specific exposure. Systematic risk accounts for 24.9% of total variance, while idiosyncratic risk dominates at 75.1%, underscoring the importance of firm‑level fundamentals in driving performance.
Beta & Correlation Metrics
CCB
The market beta of 1.221 classifies CCB as an aggressive equity, meaning its price swings are expected to exceed those of the S&P 500 by roughly 22% on average. The asymmetric betas—upside 1.381 and downside 1.263—suggest a slightly higher upside capture ratio, which can be attractive in rising markets but does not dramatically reduce downside risk. With an R‑squared below 0.30, diversification benefits are notable: the majority of price movement is driven by factors unique to CCB rather than broad market forces.
  • CCB’s trailing beta (1.221) exceeds the aggressive threshold, indicating heightened sensitivity to overall market movements.
  • Upside beta (1.381) is higher than downside beta (1.263), reflecting modest asymmetry that favors gains in bullish periods.
  • R‑squared of 0.249 signals that only 24.9% of price variance is explained by the S&P 500, leaving substantial idiosyncratic risk for investors to consider.
  • Systematic risk constitutes 24.9% of total variance; idiosyncratic risk dominates at 75.1%, highlighting firm‑specific drivers.
  • Sector beta (1.189) is slightly lower than market beta, indicating that a portion of CCB’s volatility stems from financial‑services sector dynamics rather than pure market exposure.
Positive Characteristics
  • Higher upside beta offers potential for outperformance during market rallies.
  • Low R‑squared provides diversification benefits within a broader portfolio.
  • Dominant idiosyncratic risk allows skilled analysts to add value through company‑specific research.
Beta & Correlation
Coastal Financial Corporation (CCB) — Rolling Beta
Positive Notes

Higher upside beta offers potential for outperformance during market rallies.

Low R‑squared provides diversification benefits within a broader portfolio.

Dominant idiosyncratic risk allows skilled analysts to add value through company‑specific research.

Risk-Adjusted Returns
Coastal Financial Corporation (CCB) — Risk-Adjusted Performance
Coastal Financial Corporation (CCB) exhibits modest risk-adjusted performance when benchmarked against standard thresholds. The Sharpe ratio of 0.551 falls below the 1.0 benchmark for a good risk‑adjusted return, indicating that the stock’s excess return over the 3.63% risk‑free rate is relatively low per unit of total volatility. However, the Sortino ratio of 0.737 exceeds the Sharpe, suggesting that downside volatility is less pronounced than overall volatility and that the equity’s returns are more favorable when losses are filtered out.
Risk-free rate: 3.63% (Fed Funds Rate)
Risk-Adjusted Metrics
CCB
The Calmar ratio of 0.598 signals a moderate return relative to the worst historical drawdown, implying that while the company can generate positive returns, it has experienced sizable declines that temper its risk‑adjusted appeal. An Information Ratio of 0.38, below the 0.5 threshold, points to inconsistent alpha generation and suggests that any active management outperformance is modest. The Treynor ratio of 21.632 indicates a high return per unit of systematic (beta) risk, but this figure must be interpreted alongside the lower Sharpe, which reflects elevated total volatility beyond market risk.
  • Sharpe ratio below 1.0 signals limited excess return relative to total risk.
  • Sortino ratio higher than Sharpe highlights a comparatively benign downside risk profile.
  • Calmar ratio under 0.6 indicates that historical drawdowns have eroded risk‑adjusted returns.
  • Information Ratio of 0.38 suggests only modest consistency in generating alpha.
  • Treynor ratio is high, reflecting strong compensation for systematic market exposure.
Positive Characteristics
  • Sortino ratio above the Sharpe demonstrates a favorable downside volatility characteristic.
  • High Treynor ratio shows robust return per unit of market (beta) risk.
Risk-Adjusted Returns
Coastal Financial Corporation (CCB) — Rolling Sharpe & Sortino
Positive Notes

Sortino ratio above the Sharpe demonstrates a favorable downside volatility characteristic.

High Treynor ratio shows robust return per unit of market (beta) risk.

Market Regime Analysis
Coastal Financial Corporation (CCB) — Regime Behavior
Coastal Financial Corporation (CCB) demonstrates a pronounced sensitivity to market volatility, delivering higher returns during bullish periods marked by elevated volatility and sustaining modest gains in calmer uptrends. In bear markets the stock’s performance turns negative, yet losses are significantly muted relative to broader equity declines, reflecting defensive characteristics. The company’s upside capture of 110.4% combined with a downside capture of only 47.4% yields a capture ratio of 2.33, indicating that it historically extracts more than twice the upside while absorbing less than half of the downside, an attractive risk‑adjusted profile for investors navigating volatile environments.
Current Market Regime: Bull-HighVol
Bull-LowVol = calm uptrend • Bull-HighVol = volatile uptrend • Bear-LowVol = orderly decline • Bear-HighVol = crisis
Regime Returns & Capture Ratios
CCB
During Bull‑LowVol regimes CCB generated an average monthly return of 3.92% over 38 months, showing solid performance even when market moves are subdued. In the current Bull‑HighVol regime, its average return rises to 4.63% (32‑month history), suggesting the stock thrives on heightened price swings while the broader market remains in an uptrend. When markets turn bearish, CCB’s losses shrink considerably: -2.59% in Bear‑LowVol and -3.63% in Bear‑HighVol, both well above the S&P 500’s typical declines, underscoring its defensive tilt. The strong upside capture (110.4%) paired with low downside capture (47.4%) translates into a capture ratio of 2.33, confirming that CCB consistently outperforms on the upside while limiting downside exposure.
Market Regime Analysis
Coastal Financial Corporation (CCB) — Regime & Capture Charts
Regime Timeline
  • CCB’s average returns increase from 3.92% in calm bull markets to 4.63% in volatile bull markets, indicating a positive volatility bias.
  • In bear environments the stock loses less than half of what the market typically sheds, with downside capture below 50%.
  • The capture ratio of 2.33 exceeds the benchmark threshold of 1.0, reflecting superior upside extraction relative to downside risk.
  • Current Bull‑HighVol conditions favor CCB’s return profile, aligning with its historical strength in volatile uptrends.
Positive Characteristics
  • High upside capture (110.4%) demonstrates strong participation in market rallies.
  • Low downside capture (47.4%) provides a defensive buffer during market declines.
  • Capture ratio of 2.33 signals favorable risk‑adjusted performance across regimes.
Investment Highlights & Risk Summary
Coastal Financial Corporation (CCB) — Summary & Implications
Coastal Financial Corporation (CCB) has delivered a challenging performance over the past year, posting a total return of -27.49% and an alpha of -46.49% versus the S&P 500. The stock’s volatility is elevated at 47.92% annualized, and it experienced a severe maximum drawdown of -50.22%, underscoring substantial capital‑loss risk. Despite these headwinds, CCB exhibits a pronounced upside capture of 110.4% while limiting downside exposure to 47.4%, suggesting the business can participate in market rallies with relatively modest losses during downturns. Investors should weigh the attractive asymmetric return profile against the high volatility, deep drawdown history, and significant underperformance relative to its financial‑services sector peers.
Summary Dashboard
Investment Highlights
  • Upside capture of 110.4% indicates that CCB participates more fully in market gains than the broader S&P 500.
  • Downside capture of 47.4% reflects a defensive characteristic, limiting losses to less than half of market declines.
  • Sortino ratio of 0.737, while below the benchmark of 1.0, exceeds the Sharpe ratio (0.551) by focusing on downside risk, highlighting that returns are generated with relatively lower harmful volatility.
  • Beta of 1.221 shows the stock is more responsive than the market, offering higher potential upside when equities rally.
Risk-Return Rankings
CCB HIGH
High‑volatility, deep‑drawdown profile with strong asymmetric capture but substantial sector lag.
Strength: Upside capture of 110.4% with downside capture under 50%
Concern: Maximum drawdown of -50.22% and annualized volatility of 47.92%
Key Takeaways
  • CCB’s asymmetric return profile could be attractive for investors seeking upside participation while limiting downside exposure.
  • The stock’s high beta and volatility mean price swings can be large, demanding a tolerance for short‑term turbulence.
  • Sector underperformance of -28.05% versus the XLF index suggests that broader financial‑services trends are weighing on CCB.
  • Deep historical drawdown signals that capital preservation is a primary risk factor to monitor.
PORTFOLIO IMPLICATIONS
In a diversified equity portfolio, CCB may serve as an opportunistic satellite position for investors who want exposure to the financial sector’s upside while accepting heightened volatility. Its strong upside capture can complement core holdings with lower beta, but the deep drawdown history and high volatility warrant limiting allocation size or pairing it with defensive assets (e.g., high‑quality bonds) to mitigate tail risk. Monitoring sector dynamics and macroeconomic stressors will be essential for managing potential downside scenarios.
CCB
Related Reports
Section Title Date
Macroeconomic Context (Slides) Higher Interest Rates Test Coastal Financial’s Lending Resilience 2026-06-07 Valuation Analysis (Slides) DCF Models Spot Massive Upside in Coastal Financial — A Rare Valuation Gap 2026-06-07
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Report written 2026-06-07 • Finexus
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Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.

Created 2026-06-07 · finexus.net

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