Correlation Between Grand River and Commercial National

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

By analyzing existing cross correlation between Grand River Commerce and Commercial National Financial, you can compare the effects of market volatilities on Grand River and Commercial 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 Grand River with a short position of Commercial National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand River and Commercial National.

Diversification Opportunities for Grand River and Commercial National

-0.57

Correlation Coefficient

Grand River  Commercial National

Excellent diversification

The 3 months correlation between Grand and Commercial is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and Commercial National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial National and Grand River 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 Grand River Commerce are associated (or correlated) with Commercial National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial National has no effect on the direction of Grand River i.e., Grand River and Commercial National go up and down completely randomly.

Pair Corralation between Grand River and Commercial National

Given the investment horizon of 90 days Grand River is expected to generate 17.08 times less return on investment than Commercial National. In addition to that, Grand River is 2.11 times more volatile than Commercial National Financial. It trades about 0.0 of its total potential returns per unit of risk. Commercial National Financial is currently generating about 0.11 per unit of volatility. If you would invest  910.00  in Commercial National Financial on September 13, 2024 and sell it today you would earn a total of  77.00  from holding Commercial National Financial or generate 8.46% return on investment over 90 days.

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

Grand River Commerce  vs.  Commercial National Financial

Grand River Commerce

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Grand River Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grand River is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Commercial National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Commercial National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grand River and Commercial National

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

The idea behind Grand River Commerce and Commercial National 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.