Correlation Between Comerica and Evans Bancorp
Can any of the company-specific risk be diversified away by investing in both Comerica and Evans Bancorp 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 Evans Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Evans Bancorp, you can compare the effects of market volatilities on Comerica and Evans Bancorp 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 Evans Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Evans Bancorp.
Diversification Opportunities for Comerica and Evans Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Comerica and Evans is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Evans Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evans Bancorp 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 Evans Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evans Bancorp has no effect on the direction of Comerica i.e., Comerica and Evans Bancorp go up and down completely randomly.
Pair Corralation between Comerica and Evans Bancorp
Considering the 90-day investment horizon Comerica is expected to generate 1.04 times more return on investment than Evans Bancorp. However, Comerica is 1.04 times more volatile than Evans Bancorp. It trades about 0.25 of its potential returns per unit of risk. Evans Bancorp is currently generating about 0.21 per unit of risk. If you would invest 6,267 in Comerica on August 28, 2024 and sell it today you would earn a total of 1,006 from holding Comerica or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. Evans Bancorp
Performance |
| Timeline |
| Comerica |
| Evans Bancorp |
Comerica and Evans Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Evans Bancorp
The main advantage of trading using opposite Comerica and Evans Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Evans Bancorp 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 Evans Bancorp will offset losses from the drop in Evans Bancorp's long position.The idea behind Comerica and Evans Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Evans Bancorp vs. Fifth Third Bancorp | Evans Bancorp vs. Huntington Bancshares Incorporated | Evans Bancorp vs. Comerica | Evans Bancorp vs. MT Bank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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