Correlation Between Commerce Bancshares and Business First
Can any of the company-specific risk be diversified away by investing in both Commerce Bancshares and Business First 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 Commerce Bancshares and Business First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Bancshares and Business First Bancshares, you can compare the effects of market volatilities on Commerce Bancshares and Business First 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 Commerce Bancshares with a short position of Business First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and Business First.
Diversification Opportunities for Commerce Bancshares and Business First
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commerce and Business is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Business First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business First Bancshares and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with Business First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business First Bancshares has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Business First go up and down completely randomly.
Pair Corralation between Commerce Bancshares and Business First
Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.73 times more return on investment than Business First. However, Commerce Bancshares is 1.37 times less risky than Business First. It trades about 0.27 of its potential returns per unit of risk. Business First Bancshares is currently generating about 0.14 per unit of risk. If you would invest 6,190 in Commerce Bancshares on August 24, 2024 and sell it today you would earn a total of 991.00 from holding Commerce Bancshares or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerce Bancshares vs. Business First Bancshares
Performance |
| Timeline |
| Commerce Bancshares |
| Business First Bancshares |
Commerce Bancshares and Business First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Bancshares and Business First
The main advantage of trading using opposite Commerce Bancshares and Business First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares position performs unexpectedly, Business First 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 Business First will offset losses from the drop in Business First's long position.| Commerce Bancshares vs. BOK Financial | Commerce Bancshares vs. Texas Capital Bancshares | Commerce Bancshares vs. United Bankshares | Commerce Bancshares vs. Prosperity Bancshares |
| Business First vs. First Community | Business First vs. Community West Bancshares | Business First vs. First Financial Northwest | Business First vs. First Northwest Bancorp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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