Correlation Between First Bancshares, and US Bancorp
Can any of the company-specific risk be diversified away by investing in both First Bancshares, 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 First Bancshares, and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The First Bancshares, and US Bancorp, you can compare the effects of market volatilities on First Bancshares, 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 First Bancshares, with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares, and US Bancorp.
Diversification Opportunities for First Bancshares, and US Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and USB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The First Bancshares, and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and First Bancshares, 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 The First Bancshares, 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 First Bancshares, i.e., First Bancshares, and US Bancorp go up and down completely randomly.
Pair Corralation between First Bancshares, and US Bancorp
Given the investment horizon of 90 days The First Bancshares, is expected to generate 1.56 times more return on investment than US Bancorp. However, First Bancshares, is 1.56 times more volatile than US Bancorp. It trades about 0.21 of its potential returns per unit of risk. US Bancorp is currently generating about 0.22 per unit of risk. If you would invest 3,276 in The First Bancshares, on August 26, 2024 and sell it today you would earn a total of 489.00 from holding The First Bancshares, or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The First Bancshares, vs. US Bancorp
Performance |
| Timeline |
| First Bancshares, |
| US Bancorp |
First Bancshares, and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares, and US Bancorp
The main advantage of trading using opposite First Bancshares, and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares, 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.| First Bancshares, vs. Fifth Third Bancorp | First Bancshares, vs. Zions Bancorporation | First Bancshares, vs. Huntington Bancshares Incorporated | First Bancshares, vs. PNC Financial Services |
| US Bancorp vs. Banco Santander Brasil | US Bancorp vs. CrossFirst Bankshares | US Bancorp vs. Banco Bradesco SA | US Bancorp vs. CF Bankshares |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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