Correlation Between Comerica and Virginia National

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

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

Diversification Opportunities for Comerica and Virginia National

0.11

Correlation Coefficient

Comerica  Virginia National

Average diversification

The 3 months correlation between Comerica and Virginia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Comerica i.e., Comerica and Virginia National go up and down completely randomly.

Pair Corralation between Comerica and Virginia National

Considering the 90-day investment horizon Comerica is expected to under-perform the Virginia National. In addition to that, Comerica is 1.11 times more volatile than Virginia National Bankshares. It trades about -0.02 of its total potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.01 per unit of volatility. If you would invest  3,756  in Virginia National Bankshares on December 29, 2024 and sell it today you would lose (11.00) from holding Virginia National Bankshares or give up 0.29% of portfolio value over 90 days.

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

Comerica  vs.  Virginia National Bankshares

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.

Virginia National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Virginia National is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Comerica and Virginia National

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

The idea behind Comerica and Virginia National Bankshares 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.