Correlation Between Comerica and Valley National

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

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

Diversification Opportunities for Comerica and Valley National

0.86

Correlation Coefficient

Comerica  Valley National

Very poor diversification

The 3 months correlation between Comerica and Valley is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Comerica i.e., Comerica and Valley National go up and down completely randomly.

Pair Corralation between Comerica and Valley National

Considering the 90-day investment horizon Comerica is expected to under-perform the Valley National. But the stock apears to be less risky and, when comparing its historical volatility, Comerica is 1.09 times less risky than Valley National. The stock trades about -0.01 of its potential returns per unit of risk. The Valley National Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Valley National Bancorp on December 28, 2024 and sell it today you would lose (2.00) from holding Valley National Bancorp or give up 0.22% of portfolio value over 90 days.

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

Comerica  vs.  Valley National Bancorp

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.

Valley National Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valley National Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Valley National is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Comerica and Valley National

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

The idea behind Comerica and Valley National Bancorp 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.