Correlation Between Comerica and International Bancshares
Can any of the company-specific risk be diversified away by investing in both Comerica and International Bancshares 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 International Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and International Bancshares, you can compare the effects of market volatilities on Comerica and International Bancshares 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 International Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and International Bancshares.
Diversification Opportunities for Comerica and International Bancshares
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Comerica and International is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Bancshares 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 International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of Comerica i.e., Comerica and International Bancshares go up and down completely randomly.
Pair Corralation between Comerica and International Bancshares
Considering the 90-day investment horizon Comerica is expected to under-perform the International Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Comerica is 1.02 times less risky than International Bancshares. The stock trades about -0.16 of its potential returns per unit of risk. The International Bancshares is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 7,308 in International Bancshares on September 12, 2024 and sell it today you would lose (258.00) from holding International Bancshares or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comerica vs. International Bancshares
Performance |
| Timeline |
| Comerica |
| International Bancshares |
Comerica and International Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and International Bancshares
The main advantage of trading using opposite Comerica and International Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, International Bancshares 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 International Bancshares will offset losses from the drop in International Bancshares' long position.| Comerica vs. JPMorgan Chase Co | Comerica vs. Citigroup | Comerica vs. Wells Fargo | Comerica vs. Toronto Dominion Bank |
| International Bancshares vs. JPMorgan Chase Co | International Bancshares vs. Citigroup | International Bancshares vs. Wells Fargo | International Bancshares vs. Toronto Dominion 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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