Correlation Between AGRICUL BK and US Bancorp
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK 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 AGRICUL BK and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICUL BK CHINA H and US Bancorp, you can compare the effects of market volatilities on AGRICUL BK 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 AGRICUL BK with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and US Bancorp.
Diversification Opportunities for AGRICUL BK and US Bancorp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICUL and UB5 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and AGRICUL BK 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 AGRICUL BK CHINA H 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 AGRICUL BK i.e., AGRICUL BK and US Bancorp go up and down completely randomly.
Pair Corralation between AGRICUL BK and US Bancorp
Assuming the 90 days trading horizon AGRICUL BK is expected to generate 25.75 times less return on investment than US Bancorp. But when comparing it to its historical volatility, AGRICUL BK CHINA H is 1.14 times less risky than US Bancorp. It trades about 0.01 of its potential returns per unit of risk. US Bancorp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,480 in US Bancorp on August 28, 2024 and sell it today you would earn a total of 500.00 from holding US Bancorp or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICUL BK CHINA H vs. US Bancorp
Performance |
| Timeline |
| AGRICUL BK CHINA |
| US Bancorp |
AGRICUL BK and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and US Bancorp
The main advantage of trading using opposite AGRICUL BK and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK 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.The idea behind AGRICUL BK CHINA H and US Bancorp 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.| US Bancorp vs. Superior Plus Corp | US Bancorp vs. NMI Holdings | US Bancorp vs. Origin Agritech | US Bancorp vs. SIVERS SEMICONDUCTORS AB |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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