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, 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
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merchants and USB-PR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 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 generate 2.36 times more return on investment than US Bancorp. However, Merchants Marine is 2.36 times more volatile than US Bancorp. It trades about 0.04 of its potential returns per unit of risk. US Bancorp is currently generating about 0.05 per unit of risk. If you would invest 3,675 in Merchants Marine Bancorp on September 1, 2024 and sell it today you would earn a total of 645.00 from holding Merchants Marine Bancorp or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.68% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. US Bancorp
Performance |
| Timeline |
| Merchants Marine Bancorp |
| US Bancorp |
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 |
| US Bancorp vs. US Bancorp | US Bancorp vs. Bank of America | US Bancorp vs. US Bancorp | US Bancorp vs. Wells Fargo |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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