Correlation Between FS Bancorp and Comerica

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

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

Diversification Opportunities for FS Bancorp and Comerica

0.76

Correlation Coefficient

FS Bancorp  Comerica

Poor diversification

The 3 months correlation between FSBW and Comerica is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FS Bancorp and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and FS Bancorp 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 FS Bancorp 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 FS Bancorp i.e., FS Bancorp and Comerica go up and down completely randomly.

Pair Corralation between FS Bancorp and Comerica

Given the investment horizon of 90 days FS Bancorp is expected to generate 4.26 times less return on investment than Comerica. In addition to that, FS Bancorp is 1.07 times more volatile than Comerica. It trades about 0.02 of its total potential returns per unit of risk. Comerica is currently generating about 0.11 per unit of volatility. If you would invest  5,799  in Comerica on September 15, 2024 and sell it today you would earn a total of  848.00  from holding Comerica or generate 14.62% return on investment over 90 days.

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

FS Bancorp  vs.  Comerica

FS Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental drivers, FS Bancorp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 FS Bancorp and Comerica

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

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.