Correlation Between First Republic and Comerica
Can any of the company-specific risk be diversified away by investing in both First Republic 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 Republic and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and Comerica, you can compare the effects of market volatilities on First Republic 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 Republic with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Comerica.
Diversification Opportunities for First Republic and Comerica
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Comerica is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and First Republic 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 Republic Bank 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 Republic i.e., First Republic and Comerica go up and down completely randomly.
Pair Corralation between First Republic and Comerica
Given the investment horizon of 90 days First Republic Bank is expected to under-perform the Comerica. In addition to that, First Republic is 5.03 times more volatile than Comerica. It trades about -0.11 of its total potential returns per unit of risk. Comerica is currently generating about 0.03 per unit of volatility. If you would invest 5,932 in Comerica on August 24, 2024 and sell it today you would earn a total of 958.00 from holding Comerica or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.72% |
| Values | Daily Returns |
First Republic Bank vs. Comerica
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Comerica |
First Republic and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Comerica
The main advantage of trading using opposite First Republic and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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 Republic vs. Jacobs Solutions | First Republic vs. Chester Mining | First Republic vs. Papaya Growth Opportunity | First Republic vs. Harmony Gold Mining |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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