Correlation Between Comerica and Triumph Financial

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

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

Diversification Opportunities for Comerica and Triumph Financial

0.21

Correlation Coefficient

Comerica  Triumph Financial

Modest diversification

The 3 months correlation between Comerica and Triumph is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Triumph Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Financial 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 Triumph Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Financial has no effect on the direction of Comerica i.e., Comerica and Triumph Financial go up and down completely randomly.

Pair Corralation between Comerica and Triumph Financial

Considering the 90-day investment horizon Comerica is expected to generate 1.96 times more return on investment than Triumph Financial. However, Comerica is 1.96 times more volatile than Triumph Financial. It trades about 0.11 of its potential returns per unit of risk. Triumph Financial is currently generating about 0.09 per unit of risk. If you would invest  5,799  in Comerica on September 16, 2024 and sell it today you would earn a total of  859.00  from holding Comerica or generate 14.81% return on investment over 90 days.

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

Comerica  vs.  Triumph Financial

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

Triumph Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Triumph Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Comerica and Triumph Financial

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

The idea behind Comerica and Triumph Financial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.