Correlation Between Commerzbank and Southern Missouri

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

By analyzing existing cross correlation between Commerzbank AG and Southern Missouri Bancorp, you can compare the effects of market volatilities on Commerzbank and Southern Missouri 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 Commerzbank with a short position of Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Southern Missouri.

Diversification Opportunities for Commerzbank and Southern Missouri

-0.04

Correlation Coefficient

Commerzbank  Southern Missouri

Good diversification

The 3 months correlation between Commerzbank and Southern is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp and Commerzbank 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 Commerzbank AG are associated (or correlated) with Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Commerzbank i.e., Commerzbank and Southern Missouri go up and down completely randomly.

Pair Corralation between Commerzbank and Southern Missouri

Assuming the 90 days horizon Commerzbank AG is expected to generate 2.0 times more return on investment than Southern Missouri. However, Commerzbank is 2.0 times more volatile than Southern Missouri Bancorp. It trades about 0.21 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about -0.01 per unit of risk. If you would invest  1,861  in Commerzbank AG on November 28, 2024 and sell it today you would earn a total of  250.00  from holding Commerzbank AG or generate 13.43% return on investment over 90 days.

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

Commerzbank AG  vs.  Southern Missouri Bancorp

Commerzbank AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, Commerzbank reported solid returns over the last few months and may actually be approaching a breakup point.

Southern Missouri Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern Missouri Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Commerzbank and Southern Missouri

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

The idea behind Commerzbank AG and Southern Missouri 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.