Correlation Between Wells Fargo and Comerica
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Comerica, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Comerica.
Diversification Opportunities for Wells Fargo and Comerica
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Comerica is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Wells Fargo 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 Wells Fargo 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 Wells Fargo i.e., Wells Fargo and Comerica go up and down completely randomly.
Pair Corralation between Wells Fargo and Comerica
Considering the 90-day investment horizon Wells Fargo is expected to generate 1.01 times more return on investment than Comerica. However, Wells Fargo is 1.01 times more volatile than Comerica. It trades about 0.16 of its potential returns per unit of risk. Comerica is currently generating about 0.09 per unit of risk. If you would invest 6,180 in Wells Fargo on September 13, 2024 and sell it today you would earn a total of 979.50 from holding Wells Fargo or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. Comerica
Performance |
| Timeline |
| Wells Fargo |
| Comerica |
Wells Fargo and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Comerica
The main advantage of trading using opposite Wells Fargo and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Citigroup | Wells Fargo vs. Nu Holdings | Wells Fargo vs. HSBC Holdings PLC | Wells Fargo vs. Canadian Imperial Bank |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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