Correlation Between US Bancorp and CIB Marine
Can any of the company-specific risk be diversified away by investing in both US Bancorp and CIB Marine 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 CIB Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and CIB Marine Bancshares, you can compare the effects of market volatilities on US Bancorp and CIB Marine 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 CIB Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and CIB Marine.
Diversification Opportunities for US Bancorp and CIB Marine
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USB-PH and CIB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and CIB Marine Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIB Marine Bancshares 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 CIB Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIB Marine Bancshares has no effect on the direction of US Bancorp i.e., US Bancorp and CIB Marine go up and down completely randomly.
Pair Corralation between US Bancorp and CIB Marine
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.26 times more return on investment than CIB Marine. However, US Bancorp is 3.91 times less risky than CIB Marine. It trades about 0.33 of its potential returns per unit of risk. CIB Marine Bancshares is currently generating about 0.05 per unit of risk. If you would invest 2,186 in US Bancorp on August 30, 2024 and sell it today you would earn a total of 73.00 from holding US Bancorp or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
US Bancorp vs. CIB Marine Bancshares
Performance |
| Timeline |
| US Bancorp |
| CIB Marine Bancshares |
US Bancorp and CIB Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and CIB Marine
The main advantage of trading using opposite US Bancorp and CIB Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, CIB Marine 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 CIB Marine will offset losses from the drop in CIB Marine's long position.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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