Correlation Between Comerica and Southeastern Banking

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

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

Diversification Opportunities for Comerica and Southeastern Banking

0.19

Correlation Coefficient

Comerica  Southeastern Banking

Average diversification

The 3 months correlation between Comerica and Southeastern is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Southeastern Banking Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southeastern Banking Corp 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 Southeastern Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southeastern Banking Corp has no effect on the direction of Comerica i.e., Comerica and Southeastern Banking go up and down completely randomly.

Pair Corralation between Comerica and Southeastern Banking

Considering the 90-day investment horizon Comerica is expected to generate 1.2 times more return on investment than Southeastern Banking. However, Comerica is 1.2 times more volatile than Southeastern Banking Corp. It trades about -0.02 of its potential returns per unit of risk. Southeastern Banking Corp is currently generating about -0.09 per unit of risk. If you would invest  6,068  in Comerica on December 30, 2024 and sell it today you would lose (196.00) from holding Comerica or give up 3.23% of portfolio value over 90 days.

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

Comerica  vs.  Southeastern Banking Corp

Comerica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Comerica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Southeastern Banking Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southeastern Banking Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Comerica and Southeastern Banking

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

The idea behind Comerica and Southeastern Banking Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.