Correlation Between ECB Bancorp and Comerica
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and Comerica 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 ECB Bancorp and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and Comerica, you can compare the effects of market volatilities on ECB Bancorp and Comerica 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 ECB Bancorp with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and Comerica.
Diversification Opportunities for ECB Bancorp and Comerica
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECB and Comerica is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and ECB Bancorp 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 ECB Bancorp are associated (or correlated) with Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Comerica go up and down completely randomly.
Pair Corralation between ECB Bancorp and Comerica
Given the investment horizon of 90 days ECB Bancorp is expected to generate 0.66 times more return on investment than Comerica. However, ECB Bancorp is 1.52 times less risky than Comerica. It trades about -0.14 of its potential returns per unit of risk. Comerica is currently generating about -0.27 per unit of risk. If you would invest 1,540 in ECB Bancorp on October 7, 2024 and sell it today you would lose (50.00) from holding ECB Bancorp or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. Comerica
Performance |
| Timeline |
| ECB Bancorp |
| Comerica |
ECB Bancorp and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and Comerica
The main advantage of trading using opposite ECB Bancorp and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, Comerica 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 Comerica will offset losses from the drop in Comerica's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
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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