Correlation Between First Ottawa and Commerzbank
Can any of the company-specific risk be diversified away by investing in both First Ottawa 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 First Ottawa and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Ottawa Bancshares and Commerzbank AG, you can compare the effects of market volatilities on First Ottawa 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 First Ottawa with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ottawa and Commerzbank.
Diversification Opportunities for First Ottawa and Commerzbank
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Commerzbank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Ottawa Bancshares and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG and First Ottawa 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 Ottawa Bancshares 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 First Ottawa i.e., First Ottawa and Commerzbank go up and down completely randomly.
Pair Corralation between First Ottawa and Commerzbank
Given the investment horizon of 90 days First Ottawa is expected to generate 3.62 times less return on investment than Commerzbank. But when comparing it to its historical volatility, First Ottawa Bancshares is 1.88 times less risky than Commerzbank. It trades about 0.04 of its potential returns per unit of risk. Commerzbank AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Commerzbank AG on March 17, 2024 and sell it today you would earn a total of 948.00 from holding Commerzbank AG or generate 122.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 85.92% |
Values | Daily Returns |
First Ottawa Bancshares vs. Commerzbank AG
Performance |
Timeline |
First Ottawa Bancshares |
Commerzbank AG |
First Ottawa and Commerzbank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Ottawa and Commerzbank
The main advantage of trading using opposite First Ottawa and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ottawa 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.First Ottawa vs. Eastern Michigan Financial | First Ottawa vs. Mifflinburg Bancorp | First Ottawa vs. Apollo Bancorp | First Ottawa vs. Community Bankers |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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