Correlation Between Comerica and First Northwest
Can any of the company-specific risk be diversified away by investing in both Comerica and First Northwest 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 Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and First Northwest Bancorp, you can compare the effects of market volatilities on Comerica and First Northwest 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 Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and First Northwest.
Diversification Opportunities for Comerica and First Northwest
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Comerica and First is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest 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 First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Comerica i.e., Comerica and First Northwest go up and down completely randomly.
Pair Corralation between Comerica and First Northwest
Considering the 90-day investment horizon Comerica is expected to generate 1.16 times more return on investment than First Northwest. However, Comerica is 1.16 times more volatile than First Northwest Bancorp. It trades about 0.07 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about -0.01 per unit of risk. If you would invest 4,520 in Comerica on August 27, 2024 and sell it today you would earn a total of 2,589 from holding Comerica or generate 57.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. First Northwest Bancorp
Performance |
| Timeline |
| Comerica |
| First Northwest Bancorp |
Comerica and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and First Northwest
The main advantage of trading using opposite Comerica and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, First Northwest 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 Northwest will offset losses from the drop in First Northwest's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Zions Bancorporation | First Northwest vs. Huntington Bancshares Incorporated | First Northwest 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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