Correlation Between Comerica and Southern California
Can any of the company-specific risk be diversified away by investing in both Comerica and Southern California 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 Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Southern California Bancorp, you can compare the effects of market volatilities on Comerica and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Southern California.
Diversification Opportunities for Comerica and Southern California
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Comerica and Southern is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Comerica i.e., Comerica and Southern California go up and down completely randomly.
Pair Corralation between Comerica and Southern California
Considering the 90-day investment horizon Comerica is expected to generate 1.72 times less return on investment than Southern California. In addition to that, Comerica is 1.12 times more volatile than Southern California Bancorp. It trades about 0.2 of its total potential returns per unit of risk. Southern California Bancorp is currently generating about 0.39 per unit of volatility. If you would invest 1,451 in Southern California Bancorp on August 31, 2024 and sell it today you would earn a total of 328.00 from holding Southern California Bancorp or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. Southern California Bancorp
Performance |
| Timeline |
| Comerica |
| Southern California |
Comerica and Southern California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Southern California
The main advantage of trading using opposite Comerica and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |