Correlation Between Commerce Bancshares and Crayon Group

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

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

Diversification Opportunities for Commerce Bancshares and Crayon Group

-0.88

Correlation Coefficient

Commerce Bancshares  Crayon Group

Pay attention - limited upside

The 3 months correlation between Commerce and Crayon is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Crayon Group go up and down completely randomly.

Pair Corralation between Commerce Bancshares and Crayon Group

Given the investment horizon of 90 days Commerce Bancshares is expected to generate 3.47 times less return on investment than Crayon Group. But when comparing it to its historical volatility, Commerce Bancshares is 2.24 times less risky than Crayon Group. It trades about 0.02 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  952.00  in Crayon Group Holding on September 26, 2024 and sell it today you would earn a total of  168.00  from holding Crayon Group Holding or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Commerce Bancshares  vs.  Crayon Group Holding

Commerce Bancshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Commerce Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crayon Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crayon Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Commerce Bancshares and Crayon Group

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

The idea behind Commerce Bancshares and Crayon Group Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.