Correlation Between Ames National and Comerica

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

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

Diversification Opportunities for Ames National and Comerica

-0.13

Correlation Coefficient

Ames National  Comerica

Good diversification

The 3 months correlation between Ames and Comerica is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Ames National 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 Ames National are associated (or correlated) with Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of Ames National i.e., Ames National and Comerica go up and down completely randomly.

Pair Corralation between Ames National and Comerica

Given the investment horizon of 90 days Ames National is expected to under-perform the Comerica. In addition to that, Ames National is 1.05 times more volatile than Comerica. It trades about -0.27 of its total potential returns per unit of risk. Comerica is currently generating about -0.19 per unit of volatility. If you would invest  7,008  in Comerica on September 15, 2024 and sell it today you would lose (361.00) from holding Comerica or give up 5.15% of portfolio value over 90 days.

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

Ames National  vs.  Comerica

Ames National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ames National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Comerica

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ames National and Comerica

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

The idea behind Ames National and Comerica 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.