Correlation Between Comerica and Central Pacific
Can any of the company-specific risk be diversified away by investing in both Comerica and Central Pacific 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 Central Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Central Pacific Financial, you can compare the effects of market volatilities on Comerica and Central Pacific 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 Central Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Central Pacific.
Diversification Opportunities for Comerica and Central Pacific
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Comerica and Central is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Central Pacific Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pacific Financial 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 Central Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pacific Financial has no effect on the direction of Comerica i.e., Comerica and Central Pacific go up and down completely randomly.
Pair Corralation between Comerica and Central Pacific
Considering the 90-day investment horizon Comerica is expected to generate 1.33 times less return on investment than Central Pacific. In addition to that, Comerica is 1.03 times more volatile than Central Pacific Financial. It trades about 0.11 of its total potential returns per unit of risk. Central Pacific Financial is currently generating about 0.15 per unit of volatility. If you would invest 1,835 in Central Pacific Financial on August 29, 2024 and sell it today you would earn a total of 1,404 from holding Central Pacific Financial or generate 76.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. Central Pacific Financial
Performance |
| Timeline |
| Comerica |
| Central Pacific Financial |
Comerica and Central Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Central Pacific
The main advantage of trading using opposite Comerica and Central Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Central Pacific 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 Central Pacific will offset losses from the drop in Central Pacific's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| Central Pacific vs. Bank of Hawaii | Central Pacific vs. Territorial Bancorp | Central Pacific vs. First Bancorp | Central Pacific vs. Hancock Whitney Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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