Correlation Between Comerica and Lake Shore
Can any of the company-specific risk be diversified away by investing in both Comerica and Lake Shore 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 Lake Shore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Lake Shore Bancorp, you can compare the effects of market volatilities on Comerica and Lake Shore 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 Lake Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Lake Shore.
Diversification Opportunities for Comerica and Lake Shore
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Comerica and Lake is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Lake Shore Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Shore 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 Lake Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Shore Bancorp has no effect on the direction of Comerica i.e., Comerica and Lake Shore go up and down completely randomly.
Pair Corralation between Comerica and Lake Shore
Considering the 90-day investment horizon Comerica is expected to generate 1.15 times more return on investment than Lake Shore. However, Comerica is 1.15 times more volatile than Lake Shore Bancorp. It trades about 0.09 of its potential returns per unit of risk. Lake Shore Bancorp is currently generating about 0.07 per unit of risk. If you would invest 4,662 in Comerica on September 2, 2024 and sell it today you would earn a total of 2,563 from holding Comerica or generate 54.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.97% |
| Values | Daily Returns |
Comerica vs. Lake Shore Bancorp
Performance |
| Timeline |
| Comerica |
| Lake Shore Bancorp |
Comerica and Lake Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Lake Shore
The main advantage of trading using opposite Comerica and Lake Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Lake Shore 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 Lake Shore will offset losses from the drop in Lake Shore's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| Lake Shore vs. Affinity Bancshares | Lake Shore vs. Auburn National Bancorporation | Lake Shore vs. First Community | Lake Shore vs. LINKBANCORP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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