Correlation Between US Bancorp and MT Bank
Can any of the company-specific risk be diversified away by investing in both US Bancorp and MT Bank 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 US Bancorp and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and MT Bank Corp, you can compare the effects of market volatilities on US Bancorp and MT Bank 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 US Bancorp with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and MT Bank.
Diversification Opportunities for US Bancorp and MT Bank
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UB5 and MTZ is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and US Bancorp 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 US Bancorp are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of US Bancorp i.e., US Bancorp and MT Bank go up and down completely randomly.
Pair Corralation between US Bancorp and MT Bank
Assuming the 90 days horizon US Bancorp is expected to generate 1.38 times less return on investment than MT Bank. But when comparing it to its historical volatility, US Bancorp is 1.13 times less risky than MT Bank. It trades about 0.15 of its potential returns per unit of risk. MT Bank Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 13,584 in MT Bank Corp on August 25, 2024 and sell it today you would earn a total of 7,336 from holding MT Bank Corp or generate 54.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. MT Bank Corp
Performance |
| Timeline |
| US Bancorp |
| MT Bank Corp |
US Bancorp and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and MT Bank
The main advantage of trading using opposite US Bancorp and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| US Bancorp vs. Regions Financial | US Bancorp vs. Superior Plus Corp | US Bancorp vs. NMI Holdings | US Bancorp vs. Origin Agritech |
| MT Bank vs. Regions Financial | MT Bank vs. Superior Plus Corp | MT Bank vs. NMI Holdings | MT Bank vs. Origin Agritech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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