Correlation Between Comerica and Grand River

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

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

Diversification Opportunities for Comerica and Grand River

-0.37

Correlation Coefficient

Comerica  Grand River

Very good diversification

The 3 months correlation between Comerica and Grand is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Comerica 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 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 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 Comerica i.e., Comerica and Grand River go up and down completely randomly.

Pair Corralation between Comerica and Grand River

Considering the 90-day investment horizon Comerica is expected to generate 0.77 times more return on investment than Grand River. However, Comerica is 1.29 times less risky than Grand River. It trades about 0.21 of its potential returns per unit of risk. Grand River Commerce is currently generating about 0.03 per unit of risk. If you would invest  5,414  in Comerica on September 4, 2024 and sell it today you would earn a total of  1,690  from holding Comerica or generate 31.22% return on investment over 90 days.

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

Comerica  vs.  Grand River Commerce

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 unsteady primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Grand River Commerce

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Grand River is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Comerica and Grand River

The main advantage of trading using opposite Comerica and Grand River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica 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 Comerica 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.