Correlation Between Auburn Bancorp and Commercial International

Can any of the company-specific risk be diversified away by investing in both Auburn Bancorp and Commercial International 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 Auburn Bancorp and Commercial International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auburn Bancorp and Commercial International Bank, you can compare the effects of market volatilities on Auburn Bancorp and Commercial International 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 Auburn Bancorp with a short position of Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn Bancorp and Commercial International.

Diversification Opportunities for Auburn Bancorp and Commercial International

0.05

Correlation Coefficient

Auburn Bancorp  Commercial International

Significant diversification

The 3 months correlation between Auburn and Commercial is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International and Auburn Bancorp 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 Auburn Bancorp are associated (or correlated) with Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and Commercial International go up and down completely randomly.

Pair Corralation between Auburn Bancorp and Commercial International

Given the investment horizon of 90 days Auburn Bancorp is expected to generate 4.24 times less return on investment than Commercial International. In addition to that, Auburn Bancorp is 1.54 times more volatile than Commercial International Bank. It trades about 0.01 of its total potential returns per unit of risk. Commercial International Bank is currently generating about 0.07 per unit of volatility. If you would invest  142.00  in Commercial International Bank on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Commercial International Bank or generate 6.34% return on investment over 90 days.

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

Auburn Bancorp  vs.  Commercial International Bank

Auburn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Auburn Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commercial International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial International Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Commercial International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Auburn Bancorp and Commercial International

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

The idea behind Auburn Bancorp and Commercial International Bank 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.