Correlation Between First Community and Comerica

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

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

Diversification Opportunities for First Community and Comerica

-0.06

Correlation Coefficient

First Community  Comerica

Good diversification

The 3 months correlation between First and Comerica is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and First Community 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 First Community are associated (or correlated) with Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of First Community i.e., First Community and Comerica go up and down completely randomly.

Pair Corralation between First Community and Comerica

Given the investment horizon of 90 days First Community is expected to generate 5.04 times less return on investment than Comerica. But when comparing it to its historical volatility, First Community is 1.19 times less risky than Comerica. It trades about 0.0 of its potential returns per unit of risk. Comerica is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,226  in Comerica on October 10, 2024 and sell it today you would earn a total of  30.00  from holding Comerica or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.46%
Values	Daily Returns

First Community  vs.  Comerica

First Community

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Community is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Comerica

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Community and Comerica

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

The idea behind First Community and Comerica 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.