Correlation Between Comerica and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Comerica and Affinity 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 Comerica and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Affinity Bancshares, you can compare the effects of market volatilities on Comerica and Affinity 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 Comerica with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Affinity Bancshares.
Diversification Opportunities for Comerica and Affinity Bancshares
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Comerica and Affinity is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Comerica 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 Comerica are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Comerica i.e., Comerica and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Comerica and Affinity Bancshares
Considering the 90-day investment horizon Comerica is expected to generate 3.44 times more return on investment than Affinity Bancshares. However, Comerica is 3.44 times more volatile than Affinity Bancshares. It trades about 0.11 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.04 per unit of risk. If you would invest 5,799 in Comerica on September 14, 2024 and sell it today you would earn a total of 859.00 from holding Comerica or generate 14.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Comerica vs. Affinity Bancshares
Performance |
Timeline |
Comerica |
Affinity Bancshares |
Comerica and Affinity Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Comerica and Affinity Bancshares
The main advantage of trading using opposite Comerica and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Affinity 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
Affinity Bancshares vs. Comerica | Affinity Bancshares vs. Fifth Third Bancorp | Affinity Bancshares vs. Zions Bancorporation | Affinity Bancshares vs. PNC Financial Services |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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