Correlation Between US Bancorp and Cornerstone Financial
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Cornerstone 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 Cornerstone 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 Cornerstone Financial, you can compare the effects of market volatilities on US Bancorp and Cornerstone 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 Cornerstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Cornerstone Financial.
Diversification Opportunities for US Bancorp and Cornerstone Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB-PH and Cornerstone is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Cornerstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone 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 Cornerstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Financial has no effect on the direction of US Bancorp i.e., US Bancorp and Cornerstone Financial go up and down completely randomly.
Pair Corralation between US Bancorp and Cornerstone Financial
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.38 times more return on investment than Cornerstone Financial. However, US Bancorp is 2.64 times less risky than Cornerstone Financial. It trades about 0.16 of its potential returns per unit of risk. Cornerstone Financial is currently generating about -0.01 per unit of risk. If you would invest 1,568 in US Bancorp on September 1, 2024 and sell it today you would earn a total of 740.00 from holding US Bancorp or generate 47.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.14% |
| Values | Daily Returns |
US Bancorp vs. Cornerstone Financial
Performance |
| Timeline |
| US Bancorp |
| Cornerstone Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Bancorp and Cornerstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Cornerstone Financial
The main advantage of trading using opposite US Bancorp and Cornerstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Cornerstone 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 Cornerstone Financial will offset losses from the drop in Cornerstone 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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