Correlation Between Comerica and Eurobank Ergasias

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

By analyzing existing cross correlation between Comerica and Eurobank Ergasias SA, you can compare the effects of market volatilities on Comerica and Eurobank Ergasias 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 Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Eurobank Ergasias.

Diversification Opportunities for Comerica and Eurobank Ergasias

-0.42

Correlation Coefficient

Comerica  Eurobank Ergasias

Very good diversification

The 3 months correlation between Comerica and Eurobank is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Comerica i.e., Comerica and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Comerica and Eurobank Ergasias

Considering the 90-day investment horizon Comerica is expected to generate 0.93 times more return on investment than Eurobank Ergasias. However, Comerica is 1.08 times less risky than Eurobank Ergasias. It trades about 0.2 of its potential returns per unit of risk. Eurobank Ergasias SA is currently generating about -0.03 per unit of risk. If you would invest  5,436  in Comerica on September 5, 2024 and sell it today you would earn a total of  1,644  from holding Comerica or generate 30.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Comerica  vs.  Eurobank Ergasias SA

Comerica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 16 (%) 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.

Eurobank Ergasias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobank Ergasias SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Comerica and Eurobank Ergasias

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

The idea behind Comerica and Eurobank Ergasias SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.