Correlation Between Comerica and Summit Bancshares
Can any of the company-specific risk be diversified away by investing in both Comerica and Summit 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 Summit Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comerica and Summit Bancshares, you can compare the effects of market volatilities on Comerica and Summit 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 Summit Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and Summit Bancshares.
Diversification Opportunities for Comerica and Summit Bancshares
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Comerica and Summit is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and Summit Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit 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 Summit Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bancshares has no effect on the direction of Comerica i.e., Comerica and Summit Bancshares go up and down completely randomly.
Pair Corralation between Comerica and Summit Bancshares
Considering the 90-day investment horizon Comerica is expected to generate 1.16 times more return on investment than Summit Bancshares. However, Comerica is 1.16 times more volatile than Summit Bancshares. It trades about 0.08 of its potential returns per unit of risk. Summit Bancshares is currently generating about 0.06 per unit of risk. If you would invest 3,760 in Comerica on September 4, 2024 and sell it today you would earn a total of 3,344 from holding Comerica or generate 88.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.52% |
| Values | Daily Returns |
Comerica vs. Summit Bancshares
Performance |
| Timeline |
| Comerica |
| Summit Bancshares |
Comerica and Summit Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comerica and Summit Bancshares
The main advantage of trading using opposite Comerica and Summit Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica position performs unexpectedly, Summit 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 Summit Bancshares will offset losses from the drop in Summit Bancshares' long position.| Comerica vs. International Bancshares | Comerica vs. Finward Bancorp | Comerica vs. Aquagold International | Comerica vs. Thrivent High Yield |
| Summit Bancshares vs. First Hawaiian | Summit Bancshares vs. Central Pacific Financial | Summit Bancshares vs. Territorial Bancorp | Summit Bancshares 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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