Correlation Between First Horizon and US Bancorp
Can any of the company-specific risk be diversified away by investing in both First Horizon 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 Horizon and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon National and US Bancorp, you can compare the effects of market volatilities on First Horizon 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 Horizon with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and US Bancorp.
Diversification Opportunities for First Horizon and US Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and USB is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and First Horizon 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 First Horizon National 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 Horizon i.e., First Horizon and US Bancorp go up and down completely randomly.
Pair Corralation between First Horizon and US Bancorp
Considering the 90-day investment horizon First Horizon National is expected to generate 1.44 times more return on investment than US Bancorp. However, First Horizon is 1.44 times more volatile than US Bancorp. It trades about 0.1 of its potential returns per unit of risk. US Bancorp is currently generating about 0.14 per unit of risk. If you would invest 1,537 in First Horizon National on August 24, 2024 and sell it today you would earn a total of 480.00 from holding First Horizon National or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon National vs. US Bancorp
Performance |
| Timeline |
| First Horizon National |
| US Bancorp |
First Horizon and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and US Bancorp
The main advantage of trading using opposite First Horizon and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon 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 Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| US Bancorp vs. PNC Financial Services | US Bancorp vs. KeyCorp | US Bancorp vs. Zions Bancorporation | US Bancorp vs. Fifth Third Bancorp |
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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