Correlation Between Commerzbank and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Commerzbank and Investar Holding 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 Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Investar Holding Corp, you can compare the effects of market volatilities on Commerzbank and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Investar Holding.
Diversification Opportunities for Commerzbank and Investar Holding
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commerzbank and Investar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Commerzbank i.e., Commerzbank and Investar Holding go up and down completely randomly.
Pair Corralation between Commerzbank and Investar Holding
Assuming the 90 days horizon Commerzbank AG is expected to generate 1.38 times more return on investment than Investar Holding. However, Commerzbank is 1.38 times more volatile than Investar Holding Corp. It trades about 0.09 of its potential returns per unit of risk. Investar Holding Corp is currently generating about 0.02 per unit of risk. If you would invest 824.00 in Commerzbank AG on August 26, 2024 and sell it today you would earn a total of 976.00 from holding Commerzbank AG or generate 118.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.82% |
| Values | Daily Returns |
Commerzbank AG vs. Investar Holding Corp
Performance |
| Timeline |
| Commerzbank AG |
| Investar Holding Corp |
Commerzbank and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Investar Holding
The main advantage of trading using opposite Commerzbank and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding's long position.| Commerzbank vs. Standard Bank Group | Commerzbank vs. PSB Holdings | Commerzbank vs. United Overseas Bank | Commerzbank vs. Turkiye Garanti Bankasi |
| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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