Correlation Between Yellow Pages and Commerce Bancshares

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

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

Diversification Opportunities for Yellow Pages and Commerce Bancshares

0.69

Correlation Coefficient

Yellow Pages  Commerce Bancshares

Poor diversification

The 3 months correlation between Yellow and Commerce is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Commerce Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Bancshares and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with Commerce Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Bancshares has no effect on the direction of Yellow Pages i.e., Yellow Pages and Commerce Bancshares go up and down completely randomly.

Pair Corralation between Yellow Pages and Commerce Bancshares

Assuming the 90 days horizon Yellow Pages Limited is expected to generate 0.83 times more return on investment than Commerce Bancshares. However, Yellow Pages Limited is 1.21 times less risky than Commerce Bancshares. It trades about 0.35 of its potential returns per unit of risk. Commerce Bancshares is currently generating about -0.52 per unit of risk. If you would invest  744.00  in Yellow Pages Limited on September 24, 2024 and sell it today you would earn a total of  46.00  from holding Yellow Pages Limited or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Yellow Pages Limited  vs.  Commerce Bancshares

Yellow Pages Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Commerce Bancshares

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Yellow Pages and Commerce Bancshares

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

The idea behind Yellow Pages Limited and Commerce Bancshares 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.