Correlation Between Comerica and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Comerica and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and NSTAR Electric, you can compare the effects of market volatilities on Comerica and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and NSTAR Electric.
Diversification Opportunities for Comerica and NSTAR Electric
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Comerica and NSTAR is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Comerica i.e., Comerica and NSTAR Electric go up and down completely randomly.
Pair Corralation between Comerica and NSTAR Electric
Considering the 90-day investment horizon Comerica is expected to generate 1.4 times more return on investment than NSTAR Electric. However, Comerica is 1.4 times more volatile than NSTAR Electric. It trades about 0.07 of its potential returns per unit of risk. NSTAR Electric is currently generating about 0.02 per unit of risk. If you would invest 4,895 in Comerica on October 12, 2024 and sell it today you would earn a total of 1,334 from holding Comerica or generate 27.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Comerica vs. NSTAR Electric
Performance |
| Timeline |
| Comerica |
| NSTAR Electric |
Comerica and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and NSTAR Electric
The main advantage of trading using opposite Comerica and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
| NSTAR Electric vs. GameStop Corp | NSTAR Electric vs. Paysafe | NSTAR Electric vs. Asure Software | NSTAR Electric vs. Take Two Interactive Software |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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