Correlation Between Prosperity Bancshares and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Prosperity 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 Prosperity 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 Prosperity Bancshares and US Bancorp, you can compare the effects of market volatilities on Prosperity 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 Prosperity Bancshares with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and US Bancorp.
Diversification Opportunities for Prosperity Bancshares and US Bancorp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosperity and USB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Prosperity 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 Prosperity 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 Prosperity Bancshares i.e., Prosperity Bancshares and US Bancorp go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and US Bancorp
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to under-perform the US Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Bancshares is 1.1 times less risky than US Bancorp. The stock trades about -0.05 of its potential returns per unit of risk. The US Bancorp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 4,836 in US Bancorp on November 18, 2024 and sell it today you would lose (61.00) from holding US Bancorp or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. US Bancorp
Performance |
| Timeline |
| Prosperity Bancshares |
| US Bancorp |
Prosperity Bancshares and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and US Bancorp
The main advantage of trading using opposite Prosperity Bancshares and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity 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.| Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp | Prosperity Bancshares vs. Texas Capital Bancshares |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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