Correlation Between Comerica and First Horizon

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

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

Diversification Opportunities for Comerica and First Horizon

0.7

Correlation Coefficient

Comerica  First Horizon

Poor diversification

The 3 months correlation between Comerica and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Comerica and First Horizon National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon National and Comerica 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 Comerica are associated (or correlated) with First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon National has no effect on the direction of Comerica i.e., Comerica and First Horizon go up and down completely randomly.

Pair Corralation between Comerica and First Horizon

Considering the 90-day investment horizon Comerica is expected to under-perform the First Horizon. In addition to that, Comerica is 1.36 times more volatile than First Horizon National. It trades about -0.1 of its total potential returns per unit of risk. First Horizon National is currently generating about 0.06 per unit of volatility. If you would invest  1,480  in First Horizon National on February 2, 2024 and sell it today you would earn a total of  26.00  from holding First Horizon National or generate 1.76% return on investment over 90 days.

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

Comerica  vs.  First Horizon National

Comerica

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Comerica are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Comerica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Horizon National

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Horizon National are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical indicators, First Horizon may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Comerica and First Horizon

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

The idea behind Comerica and First Horizon National 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.