Correlation Between Commerce Bancshares and EZCORP

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

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

Diversification Opportunities for Commerce Bancshares and EZCORP

-0.11

Correlation Coefficient

Commerce Bancshares  EZCORP

Good diversification

The 3 months correlation between Commerce and EZCORP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and EZCORP go up and down completely randomly.

Pair Corralation between Commerce Bancshares and EZCORP

Given the investment horizon of 90 days Commerce Bancshares is expected to under-perform the EZCORP. But the stock apears to be less risky and, when comparing its historical volatility, Commerce Bancshares is 1.31 times less risky than EZCORP. The stock trades about 0.0 of its potential returns per unit of risk. The EZCORP Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  765.00  in EZCORP Inc on January 26, 2024 and sell it today you would earn a total of  382.00  from holding EZCORP Inc or generate 49.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Commerce Bancshares  vs.  EZCORP Inc

Commerce Bancshares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Commerce Bancshares is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

EZCORP Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EZCORP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commerce Bancshares and EZCORP

The main advantage of trading using opposite Commerce Bancshares and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares position performs unexpectedly, EZCORP 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 EZCORP will offset losses from the drop in EZCORP's long position.

The idea behind Commerce Bancshares and EZCORP Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.