Correlation Between Comerica and Ames National
Can any of the company-specific risk be diversified away by investing in both Comerica and Ames National 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 Comerica and Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Ames National, you can compare the effects of market volatilities on Comerica and Ames National 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 Comerica with a short position of Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Ames National.
Diversification Opportunities for Comerica and Ames National
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Comerica and Ames is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and Comerica 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 Comerica are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of Comerica i.e., Comerica and Ames National go up and down completely randomly.
Pair Corralation between Comerica and Ames National
Considering the 90-day investment horizon Comerica is expected to generate 0.8 times more return on investment than Ames National. However, Comerica is 1.24 times less risky than Ames National. It trades about 0.32 of its potential returns per unit of risk. Ames National is currently generating about 0.24 per unit of risk. If you would invest 6,001 in Comerica on October 20, 2024 and sell it today you would earn a total of 609.00 from holding Comerica or generate 10.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Comerica vs. Ames National
Performance |
Timeline |
Comerica |
Ames National |
Comerica and Ames National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Comerica and Ames National
The main advantage of trading using opposite Comerica and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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