Correlation Between Comerica and Grupo Financiero

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

By analyzing existing cross correlation between Comerica and Grupo Financiero Inbursa, you can compare the effects of market volatilities on Comerica and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Grupo Financiero.

Diversification Opportunities for Comerica and Grupo Financiero

-0.49

Correlation Coefficient

Comerica  Grupo Financiero

Very good diversification

The 3 months correlation between Comerica and Grupo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of Comerica i.e., Comerica and Grupo Financiero go up and down completely randomly.

Pair Corralation between Comerica and Grupo Financiero

Considering the 90-day investment horizon Comerica is expected to generate 1.2 times more return on investment than Grupo Financiero. However, Comerica is 1.2 times more volatile than Grupo Financiero Inbursa. It trades about 0.14 of its potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about -0.02 per unit of risk. If you would invest  5,600  in Comerica on September 12, 2024 and sell it today you would earn a total of  1,116  from holding Comerica or generate 19.93% return on investment over 90 days.

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

Comerica  vs.  Grupo Financiero Inbursa

Comerica

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Comerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Comerica and Grupo Financiero

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

The idea behind Comerica and Grupo Financiero Inbursa 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.