Correlation Between Commerce Bancshares and Noble Plc

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

By analyzing existing cross correlation between Commerce Bancshares and Noble plc, you can compare the effects of market volatilities on Commerce Bancshares and Noble Plc 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 Noble Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and Noble Plc.

Diversification Opportunities for Commerce Bancshares and Noble Plc

-0.28

Correlation Coefficient

Commerce Bancshares  Noble Plc

Very good diversification

The 3 months correlation between Commerce and Noble is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Noble Plc go up and down completely randomly.

Pair Corralation between Commerce Bancshares and Noble Plc

Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.72 times more return on investment than Noble Plc. However, Commerce Bancshares is 1.38 times less risky than Noble Plc. It trades about 0.02 of its potential returns per unit of risk. Noble plc is currently generating about 0.0 per unit of risk. If you would invest  5,898  in Commerce Bancshares on September 26, 2024 and sell it today you would earn a total of  433.00  from holding Commerce Bancshares or generate 7.34% return on investment over 90 days.

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

Commerce Bancshares  vs.  Noble plc

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.

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Commerce Bancshares and Noble Plc

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

The idea behind Commerce Bancshares and Noble plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..