Correlation Between Commercial National and Grand River

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

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

Diversification Opportunities for Commercial National and Grand River

-0.45

Correlation Coefficient

Commercial National  Grand River

Very good diversification

The 3 months correlation between Commercial and Grand is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce and Commercial 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 Commercial National Financial are associated (or correlated) with Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of Commercial National i.e., Commercial National and Grand River go up and down completely randomly.

Pair Corralation between Commercial National and Grand River

Given the investment horizon of 90 days Commercial National is expected to generate 3.29 times less return on investment than Grand River. But when comparing it to its historical volatility, Commercial National Financial is 2.42 times less risky than Grand River. It trades about 0.1 of its potential returns per unit of risk. Grand River Commerce is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  285.00  in Grand River Commerce on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Grand River Commerce or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Commercial National Financial  vs.  Grand River Commerce

Commercial National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Commercial National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grand River Commerce

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Commercial National and Grand River

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

The idea behind Commercial National Financial and Grand River Commerce 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.