Correlation Between Biogen and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Biogen and US Bancorp 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 Biogen and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and US Bancorp, you can compare the effects of market volatilities on Biogen and US Bancorp 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 Biogen with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and US Bancorp.
Diversification Opportunities for Biogen and US Bancorp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Biogen and USB is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Biogen 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 Biogen Inc are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Biogen i.e., Biogen and US Bancorp go up and down completely randomly.
Pair Corralation between Biogen and US Bancorp
Assuming the 90 days trading horizon Biogen Inc is expected to under-perform the US Bancorp. In addition to that, Biogen is 1.39 times more volatile than US Bancorp. It trades about -0.3 of its total potential returns per unit of risk. US Bancorp is currently generating about 0.11 per unit of volatility. If you would invest 98,690 in US Bancorp on August 31, 2024 and sell it today you would earn a total of 2,860 from holding US Bancorp or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. US Bancorp
Performance |
| Timeline |
| Biogen Inc |
| US Bancorp |
Biogen and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and US Bancorp
The main advantage of trading using opposite Biogen and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Biogen vs. UnitedHealth Group Incorporated | Biogen vs. Genworth Financial | Biogen vs. Verizon Communications | Biogen vs. Capital One Financial |
| US Bancorp vs. Ross Stores | US Bancorp vs. Lloyds Banking Group | US Bancorp vs. New Oriental Education | US Bancorp vs. Ameriprise Financial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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