Correlation Between Commerce Bancshares and Valeo SE

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

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

Diversification Opportunities for Commerce Bancshares and Valeo SE

-0.75

Correlation Coefficient

Commerce Bancshares  Valeo SE

Pay attention - limited upside

The 3 months correlation between Commerce and Valeo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Valeo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeo SE 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 Valeo SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeo SE has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Valeo SE go up and down completely randomly.

Pair Corralation between Commerce Bancshares and Valeo SE

Given the investment horizon of 90 days Commerce Bancshares is expected to under-perform the Valeo SE. But the stock apears to be less risky and, when comparing its historical volatility, Commerce Bancshares is 3.81 times less risky than Valeo SE. The stock trades about -0.28 of its potential returns per unit of risk. The Valeo SE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  797.00  in Valeo SE on September 22, 2024 and sell it today you would earn a total of  106.00  from holding Valeo SE or generate 13.3% return on investment over 90 days.

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

Commerce Bancshares  vs.  Valeo SE

Commerce Bancshares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 5 (%) 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.

Valeo SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valeo SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Commerce Bancshares and Valeo SE

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

The idea behind Commerce Bancshares and Valeo SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.