Correlation Between Banc Of and Comerica

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

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

Diversification Opportunities for Banc Of and Comerica

0.03

Correlation Coefficient

Banc Of  Comerica

Significant diversification

The 3 months correlation between Banc and Comerica is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Banc Of 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 Banc of California 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 Banc Of i.e., Banc Of and Comerica go up and down completely randomly.

Pair Corralation between Banc Of and Comerica

Assuming the 90 days trading horizon Banc of California is expected to generate 0.3 times more return on investment than Comerica. However, Banc of California is 3.33 times less risky than Comerica. It trades about 0.14 of its potential returns per unit of risk. Comerica is currently generating about 0.01 per unit of risk. If you would invest  2,419  in Banc of California on November 19, 2024 and sell it today you would earn a total of  109.00  from holding Banc of California or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Banc of California  vs.  Comerica

Banc of California

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Banc Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Comerica

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Banc Of and Comerica

The main advantage of trading using opposite Banc Of and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of 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 Banc of California 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.