Correlation Between Territorial Bancorp and Comerica
Can any of the company-specific risk be diversified away by investing in both Territorial 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 Territorial Bancorp and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and Comerica, you can compare the effects of market volatilities on Territorial 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 Territorial Bancorp with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and Comerica.
Diversification Opportunities for Territorial Bancorp and Comerica
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Territorial and Comerica is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Territorial 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 Territorial 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 Territorial Bancorp i.e., Territorial Bancorp and Comerica go up and down completely randomly.
Pair Corralation between Territorial Bancorp and Comerica
Given the investment horizon of 90 days Territorial Bancorp is expected to generate 2.79 times less return on investment than Comerica. In addition to that, Territorial Bancorp is 1.01 times more volatile than Comerica. It trades about 0.07 of its total potential returns per unit of risk. Comerica is currently generating about 0.2 per unit of volatility. If you would invest 6,294 in Comerica on August 25, 2024 and sell it today you would earn a total of 815.00 from holding Comerica or generate 12.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Territorial Bancorp vs. Comerica
Performance |
| Timeline |
| Territorial Bancorp |
| Comerica |
Territorial Bancorp and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and Comerica
The main advantage of trading using opposite Territorial Bancorp and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial 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.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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