Correlation Between First Mid and Comerica
Can any of the company-specific risk be diversified away by investing in both First Mid 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 First Mid and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mid Illinois and Comerica, you can compare the effects of market volatilities on First Mid 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 First Mid with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mid and Comerica.
Diversification Opportunities for First Mid and Comerica
Very poor diversification
The 3 months correlation between First and Comerica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Mid Illinois and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and First Mid 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 First Mid Illinois 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 First Mid i.e., First Mid and Comerica go up and down completely randomly.
Pair Corralation between First Mid and Comerica
Given the investment horizon of 90 days First Mid Illinois is expected to generate 0.6 times more return on investment than Comerica. However, First Mid Illinois is 1.67 times less risky than Comerica. It trades about 0.04 of its potential returns per unit of risk. Comerica is currently generating about 0.02 per unit of risk. If you would invest 3,032 in First Mid Illinois on September 14, 2024 and sell it today you would earn a total of 1,095 from holding First Mid Illinois or generate 36.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Mid Illinois vs. Comerica
Performance |
| Timeline |
| First Mid Illinois |
| Comerica |
First Mid and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mid and Comerica
The main advantage of trading using opposite First Mid and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mid 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.| First Mid vs. Comerica | First Mid vs. Truist Financial Corp | First Mid vs. Fifth Third Bancorp | First Mid vs. Zions Bancorporation |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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