Correlation Between Comerica and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both Comerica and BankFirst Capital 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 BankFirst Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and BankFirst Capital, you can compare the effects of market volatilities on Comerica and BankFirst Capital 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 BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and BankFirst Capital.
Diversification Opportunities for Comerica and BankFirst Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Comerica and BankFirst is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital 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 BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of Comerica i.e., Comerica and BankFirst Capital go up and down completely randomly.
Pair Corralation between Comerica and BankFirst Capital
Considering the 90-day investment horizon Comerica is expected to generate 1.65 times more return on investment than BankFirst Capital. However, Comerica is 1.65 times more volatile than BankFirst Capital. It trades about 0.03 of its potential returns per unit of risk. BankFirst Capital is currently generating about 0.02 per unit of risk. If you would invest 5,912 in Comerica on September 3, 2024 and sell it today you would earn a total of 1,313 from holding Comerica or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. BankFirst Capital
Performance |
| Timeline |
| Comerica |
| BankFirst Capital |
Comerica and BankFirst Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and BankFirst Capital
The main advantage of trading using opposite Comerica and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| BankFirst Capital vs. First Hawaiian | BankFirst Capital vs. Central Pacific Financial | BankFirst Capital vs. Territorial Bancorp | BankFirst Capital vs. Comerica |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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