Correlation Between Amalgamated Bank and Comerica

Can any of the company-specific risk be diversified away by investing in both Amalgamated Bank 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 Amalgamated Bank and Comerica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amalgamated Bank and Comerica, you can compare the effects of market volatilities on Amalgamated Bank 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 Amalgamated Bank with a short position of Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amalgamated Bank and Comerica.

Diversification Opportunities for Amalgamated Bank and Comerica

0.32

Correlation Coefficient

Amalgamated Bank  Comerica

Weak diversification

The 3 months correlation between Amalgamated and Comerica is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Amalgamated Bank and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and Amalgamated Bank 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 Amalgamated 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 Amalgamated Bank i.e., Amalgamated Bank and Comerica go up and down completely randomly.

Pair Corralation between Amalgamated Bank and Comerica

Given the investment horizon of 90 days Amalgamated Bank is expected to under-perform the Comerica. But the stock apears to be less risky and, when comparing its historical volatility, Amalgamated Bank is 1.09 times less risky than Comerica. The stock trades about -0.05 of its potential returns per unit of risk. The Comerica is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,886  in Comerica on January 24, 2024 and sell it today you would earn a total of  375.00  from holding Comerica or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amalgamated Bank  vs.  Comerica

Amalgamated Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amalgamated Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Comerica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Comerica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amalgamated Bank and Comerica

The main advantage of trading using opposite Amalgamated Bank and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amalgamated Bank 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.

The idea behind Amalgamated Bank and Comerica pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.