Correlation Between BankUnited and US Bancorp
Can any of the company-specific risk be diversified away by investing in both BankUnited 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 BankUnited and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankUnited and US Bancorp, you can compare the effects of market volatilities on BankUnited 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 BankUnited with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankUnited and US Bancorp.
Diversification Opportunities for BankUnited and US Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BankUnited and UB5 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BankUnited and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and BankUnited 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 BankUnited 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 BankUnited i.e., BankUnited and US Bancorp go up and down completely randomly.
Pair Corralation between BankUnited and US Bancorp
Assuming the 90 days horizon BankUnited is expected to generate 1.27 times more return on investment than US Bancorp. However, BankUnited is 1.27 times more volatile than US Bancorp. It trades about 0.09 of its potential returns per unit of risk. US Bancorp is currently generating about 0.09 per unit of risk. If you would invest 1,928 in BankUnited on September 12, 2024 and sell it today you would earn a total of 2,012 from holding BankUnited or generate 104.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
BankUnited vs. US Bancorp
Performance |
| Timeline |
| BankUnited |
| US Bancorp |
BankUnited and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BankUnited and US Bancorp
The main advantage of trading using opposite BankUnited and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankUnited 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.| BankUnited vs. Silicon Motion Technology | BankUnited vs. ALERION CLEANPOWER | BankUnited vs. Tencent Music Entertainment | BankUnited vs. KINGBOARD CHEMICAL |
| US Bancorp vs. Ming Le Sports | US Bancorp vs. Tower Semiconductor | US Bancorp vs. Gaztransport Technigaz SA | US Bancorp vs. Thai Beverage Public |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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