Correlation Between Comerica and First Business
Can any of the company-specific risk be diversified away by investing in both Comerica and First Business 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 First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and First Business Financial, you can compare the effects of market volatilities on Comerica and First Business 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 First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and First Business.
Diversification Opportunities for Comerica and First Business
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Comerica and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business 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 First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Comerica i.e., Comerica and First Business go up and down completely randomly.
Pair Corralation between Comerica and First Business
Considering the 90-day investment horizon Comerica is expected to generate 0.86 times more return on investment than First Business. However, Comerica is 1.17 times less risky than First Business. It trades about 0.26 of its potential returns per unit of risk. First Business Financial is currently generating about 0.22 per unit of risk. If you would invest 6,267 in Comerica on August 27, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. First Business Financial
Performance |
| Timeline |
| Comerica |
| First Business Financial |
Comerica and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and First Business
The main advantage of trading using opposite Comerica and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| First Business vs. Fifth Third Bancorp | First Business vs. Zions Bancorporation | First Business vs. Huntington Bancshares Incorporated | First Business 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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