Correlation Between Comerica and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Comerica and Commerzbank 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 Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Commerzbank AG, you can compare the effects of market volatilities on Comerica and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Commerzbank.
Diversification Opportunities for Comerica and Commerzbank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Comerica and Commerzbank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Comerica i.e., Comerica and Commerzbank go up and down completely randomly.
Pair Corralation between Comerica and Commerzbank
Considering the 90-day investment horizon Comerica is expected to generate 0.77 times more return on investment than Commerzbank. However, Comerica is 1.3 times less risky than Commerzbank. It trades about 0.23 of its potential returns per unit of risk. Commerzbank AG is currently generating about -0.22 per unit of risk. If you would invest 6,239 in Comerica on September 4, 2024 and sell it today you would earn a total of 865.00 from holding Comerica or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Comerica vs. Commerzbank AG
Performance |
| Timeline |
| Comerica |
| Commerzbank AG |
Comerica and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Commerzbank
The main advantage of trading using opposite Comerica and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| Comerica vs. International Bancshares | Comerica vs. Finward Bancorp | Comerica vs. Aquagold International | Comerica vs. Thrivent High Yield |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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