Correlation Between USCorp and Commerce Group

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

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

Diversification Opportunities for USCorp and Commerce Group

1.0

Correlation Coefficient

USCorp  Commerce Group

No risk reduction

The 3 months correlation between USCorp and Commerce is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding USCorp and Commerce Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Group Corp and USCorp 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 USCorp are associated (or correlated) with Commerce Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Group Corp has no effect on the direction of USCorp i.e., USCorp and Commerce Group go up and down completely randomly.

Pair Corralation between USCorp and Commerce Group

If you would invest  0.01  in Commerce Group Corp on July 2, 2024 and sell it today you would earn a total of  0.00  from holding Commerce Group Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	5.0%
Values	Daily Returns

USCorp  vs.  Commerce Group Corp

USCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, USCorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Commerce Group Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerce Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Commerce Group is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with USCorp and Commerce Group

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

The idea behind USCorp and Commerce Group Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.