Correlation Between German American and US Bancorp
Can any of the company-specific risk be diversified away by investing in both German American 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 German American and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between German American Bancorp and US Bancorp, you can compare the effects of market volatilities on German American 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 German American with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of German American and US Bancorp.
Diversification Opportunities for German American and US Bancorp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between German and USB is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding German American Bancorp and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and German American 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 German American Bancorp 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 German American i.e., German American and US Bancorp go up and down completely randomly.
Pair Corralation between German American and US Bancorp
Given the investment horizon of 90 days German American is expected to generate 1.21 times less return on investment than US Bancorp. But when comparing it to its historical volatility, German American Bancorp is 1.03 times less risky than US Bancorp. It trades about 0.08 of its potential returns per unit of risk. US Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,981 in US Bancorp on September 2, 2024 and sell it today you would earn a total of 2,348 from holding US Bancorp or generate 78.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
German American Bancorp vs. US Bancorp
Performance |
| Timeline |
| German American Bancorp |
| US Bancorp |
German American and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with German American and US Bancorp
The main advantage of trading using opposite German American and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if German American 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.| German American vs. Lakeland Financial | German American vs. Great Southern Bancorp | German American vs. First Merchants | German American vs. First Financial |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |