Correlation Between Merchants Marine and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Merchants Marine 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 Merchants Marine and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Marine Bancorp and US Bancorp PERP, you can compare the effects of market volatilities on Merchants Marine 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 Merchants Marine with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and US Bancorp.
Diversification Opportunities for Merchants Marine and US Bancorp
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merchants and USB-PA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and US Bancorp PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp PERP and Merchants Marine 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 Merchants Marine 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 PERP has no effect on the direction of Merchants Marine i.e., Merchants Marine and US Bancorp go up and down completely randomly.
Pair Corralation between Merchants Marine and US Bancorp
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to under-perform the US Bancorp. In addition to that, Merchants Marine is 2.47 times more volatile than US Bancorp PERP. It trades about -0.01 of its total potential returns per unit of risk. US Bancorp PERP is currently generating about 0.07 per unit of volatility. If you would invest 79,022 in US Bancorp PERP on September 1, 2024 and sell it today you would earn a total of 9,748 from holding US Bancorp PERP or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 67.31% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. US Bancorp PERP
Performance |
| Timeline |
| Merchants Marine Bancorp |
| US Bancorp PERP |
Merchants Marine and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and US Bancorp
The main advantage of trading using opposite Merchants Marine and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine 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.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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