Correlation Between Commercial National and Ledyard Financial

Can any of the company-specific risk be diversified away by investing in both Commercial National and Ledyard Financial 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 Ledyard Financial 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 Ledyard Financial Group, you can compare the effects of market volatilities on Commercial National and Ledyard Financial 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 Ledyard Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and Ledyard Financial.

Diversification Opportunities for Commercial National and Ledyard Financial

0.79

Correlation Coefficient

Commercial National  Ledyard Financial

Poor diversification

The 3 months correlation between Commercial and Ledyard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and Ledyard Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledyard Financial 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 Ledyard Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledyard Financial has no effect on the direction of Commercial National i.e., Commercial National and Ledyard Financial go up and down completely randomly.

Pair Corralation between Commercial National and Ledyard Financial

Given the investment horizon of 90 days Commercial National Financial is expected to generate 2.89 times more return on investment than Ledyard Financial. However, Commercial National is 2.89 times more volatile than Ledyard Financial Group. It trades about 0.11 of its potential returns per unit of risk. Ledyard Financial Group is currently generating about -0.01 per unit of risk. If you would invest  983.00  in Commercial National Financial on October 11, 2024 and sell it today you would earn a total of  38.00  from holding Commercial National Financial or generate 3.87% return on investment over 90 days.

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

Commercial National Financial  vs.  Ledyard Financial Group

Commercial National

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 7 (%) 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 February 2025.

Ledyard Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ledyard Financial Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Ledyard Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Commercial National and Ledyard Financial

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

The idea behind Commercial National Financial and Ledyard Financial Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.