Correlation Between United Bankshares and Comerica

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

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

Diversification Opportunities for United Bankshares and Comerica

0.91

Correlation Coefficient

United Bankshares  Comerica

Almost no diversification

The 3 months correlation between United and Comerica is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and United Bankshares 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 United Bankshares 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 United Bankshares i.e., United Bankshares and Comerica go up and down completely randomly.

Pair Corralation between United Bankshares and Comerica

Given the investment horizon of 90 days United Bankshares is expected to generate 0.7 times more return on investment than Comerica. However, United Bankshares is 1.42 times less risky than Comerica. It trades about -0.15 of its potential returns per unit of risk. Comerica is currently generating about -0.19 per unit of risk. If you would invest  4,192  in United Bankshares on September 15, 2024 and sell it today you would lose (125.00) from holding United Bankshares or give up 2.98% of portfolio value over 90 days.

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

United Bankshares  vs.  Comerica

United Bankshares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Bankshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, United Bankshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Comerica

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Bankshares and Comerica

The main advantage of trading using opposite United Bankshares and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bankshares 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 United Bankshares 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.