Correlation Between US Bancorp and Piraeus Financial
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Piraeus Financial 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 Piraeus Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Piraeus Financial Holdings, you can compare the effects of market volatilities on US Bancorp and Piraeus Financial 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 Piraeus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Piraeus Financial.
Diversification Opportunities for US Bancorp and Piraeus Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB-PH and Piraeus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Piraeus Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Financial 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 Piraeus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Financial has no effect on the direction of US Bancorp i.e., US Bancorp and Piraeus Financial go up and down completely randomly.
Pair Corralation between US Bancorp and Piraeus Financial
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.41 times more return on investment than Piraeus Financial. However, US Bancorp is 2.47 times less risky than Piraeus Financial. It trades about 0.15 of its potential returns per unit of risk. Piraeus Financial Holdings is currently generating about -0.12 per unit of risk. If you would invest 2,086 in US Bancorp on September 1, 2024 and sell it today you would earn a total of 222.00 from holding US Bancorp or generate 10.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 25.4% |
| Values | Daily Returns |
US Bancorp vs. Piraeus Financial Holdings
Performance |
| Timeline |
| US Bancorp |
| Piraeus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Bancorp and Piraeus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Piraeus Financial
The main advantage of trading using opposite US Bancorp and Piraeus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Piraeus Financial 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 Piraeus Financial will offset losses from the drop in Piraeus Financial's long position.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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