Correlation Between Commerzbank and Home Federal
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Home Federal 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 Commerzbank and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Home Federal Bancorp, you can compare the effects of market volatilities on Commerzbank and Home Federal 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 Commerzbank with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Home Federal.
Diversification Opportunities for Commerzbank and Home Federal
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commerzbank and Home is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp and Commerzbank 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 Commerzbank AG are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Commerzbank i.e., Commerzbank and Home Federal go up and down completely randomly.
Pair Corralation between Commerzbank and Home Federal
Assuming the 90 days horizon Commerzbank is expected to generate 7.26 times less return on investment than Home Federal. But when comparing it to its historical volatility, Commerzbank AG is 15.02 times less risky than Home Federal. It trades about 0.09 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,633 in Home Federal Bancorp on August 26, 2024 and sell it today you would lose (393.00) from holding Home Federal Bancorp or give up 24.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.28% |
| Values | Daily Returns |
Commerzbank AG vs. Home Federal Bancorp
Performance |
| Timeline |
| Commerzbank AG |
| Home Federal Bancorp |
Commerzbank and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Home Federal
The main advantage of trading using opposite Commerzbank and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| Commerzbank vs. Standard Bank Group | Commerzbank vs. PSB Holdings | Commerzbank vs. United Overseas Bank | Commerzbank vs. Turkiye Garanti Bankasi |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |