Correlation Between Columbia Financial and Comerica

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

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

Diversification Opportunities for Columbia Financial and Comerica

0.81

Correlation Coefficient

Columbia Financial  Comerica

Very poor diversification

The 3 months correlation between Columbia and Comerica is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Financial and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Columbia Financial 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 Columbia Financial are associated (or correlated) with Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of Columbia Financial i.e., Columbia Financial and Comerica go up and down completely randomly.

Pair Corralation between Columbia Financial and Comerica

Given the investment horizon of 90 days Columbia Financial is expected to under-perform the Comerica. But the stock apears to be less risky and, when comparing its historical volatility, Columbia Financial is 1.03 times less risky than Comerica. The stock trades about -0.3 of its potential returns per unit of risk. The Comerica is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  7,023  in Comerica on September 14, 2024 and sell it today you would lose (376.00) from holding Comerica or give up 5.35% of portfolio value over 90 days.

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

Columbia Financial  vs.  Comerica

Columbia Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Columbia Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Comerica

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Financial and Comerica

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

The idea behind Columbia Financial and Comerica 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.