Correlation Between Bio Rad and Commerce Bancshares

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

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

Diversification Opportunities for Bio Rad and Commerce Bancshares

0.36

Correlation Coefficient

Bio Rad  Commerce Bancshares

Weak diversification

The 3 months correlation between Bio and Commerce is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bio Rad Laboratories and Commerce Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Bancshares and Bio Rad 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 Bio Rad Laboratories are associated (or correlated) with Commerce Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Bancshares has no effect on the direction of Bio Rad i.e., Bio Rad and Commerce Bancshares go up and down completely randomly.

Pair Corralation between Bio Rad and Commerce Bancshares

Considering the 90-day investment horizon Bio Rad Laboratories is expected to generate 1.89 times more return on investment than Commerce Bancshares. However, Bio Rad is 1.89 times more volatile than Commerce Bancshares. It trades about 0.05 of its potential returns per unit of risk. Commerce Bancshares is currently generating about -0.02 per unit of risk. If you would invest  23,634  in Bio Rad Laboratories on May 2, 2025 and sell it today you would earn a total of  1,374  from holding Bio Rad Laboratories or generate 5.81% return on investment over 90 days.

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

Bio Rad Laboratories  vs.  Commerce Bancshares

Bio Rad Laboratories

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Rad Laboratories are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Bio Rad may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Commerce Bancshares

Risk-Adjusted Performance

Weak

Over the last 90 days Commerce Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Commerce Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bio Rad and Commerce Bancshares

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

The idea behind Bio Rad Laboratories and Commerce Bancshares 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.