Correlation Between Commerce Bancshares and CullenFrost Bankers
Can any of the company-specific risk be diversified away by investing in both Commerce Bancshares and CullenFrost Bankers 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 CullenFrost Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Bancshares and CullenFrost Bankers, you can compare the effects of market volatilities on Commerce Bancshares and CullenFrost Bankers 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 CullenFrost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and CullenFrost Bankers.
Diversification Opportunities for Commerce Bancshares and CullenFrost Bankers
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commerce and CullenFrost is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and CullenFrost Bankers go up and down completely randomly.
Pair Corralation between Commerce Bancshares and CullenFrost Bankers
Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.83 times more return on investment than CullenFrost Bankers. However, Commerce Bancshares is 1.21 times less risky than CullenFrost Bankers. It trades about 0.31 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about 0.12 per unit of risk. If you would invest 6,228 in Commerce Bancshares on August 29, 2024 and sell it today you would earn a total of 1,168 from holding Commerce Bancshares or generate 18.75% 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. CullenFrost Bankers
Performance |
| Timeline |
| Commerce Bancshares |
| CullenFrost Bankers |
Commerce Bancshares and CullenFrost Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Bancshares and CullenFrost Bankers
The main advantage of trading using opposite Commerce Bancshares and CullenFrost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares position performs unexpectedly, CullenFrost Bankers 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 CullenFrost Bankers will offset losses from the drop in CullenFrost Bankers' long position.| Commerce Bancshares vs. BOK Financial | Commerce Bancshares vs. Texas Capital Bancshares | Commerce Bancshares vs. United Bankshares | Commerce Bancshares vs. Prosperity Bancshares |
| CullenFrost Bankers vs. BancFirst | CullenFrost Bankers vs. First Financial Bankshares | CullenFrost Bankers vs. UMB Financial | CullenFrost Bankers vs. Commerce Bancshares |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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