Correlation Between Investar Holding and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Investar Holding and Commerzbank 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 Investar Holding and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and Commerzbank AG, you can compare the effects of market volatilities on Investar Holding and Commerzbank 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 Investar Holding with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and Commerzbank.
Diversification Opportunities for Investar Holding and Commerzbank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investar and Commerzbank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and Investar Holding 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 Investar Holding Corp are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Investar Holding i.e., Investar Holding and Commerzbank go up and down completely randomly.
Pair Corralation between Investar Holding and Commerzbank
Given the investment horizon of 90 days Investar Holding is expected to generate 4.84 times less return on investment than Commerzbank. But when comparing it to its historical volatility, Investar Holding Corp is 1.38 times less risky than Commerzbank. It trades about 0.02 of its potential returns per unit of risk. Commerzbank AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 |
Investar Holding Corp vs. Commerzbank AG
Performance |
| Timeline |
| Investar Holding Corp |
| Commerzbank AG |
Investar Holding and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and Commerzbank
The main advantage of trading using opposite Investar Holding and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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