Correlation Between US Bancorp and First Community
Can any of the company-specific risk be diversified away by investing in both US Bancorp and First Community 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 First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and First Community Financial, you can compare the effects of market volatilities on US Bancorp and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and First Community.
Diversification Opportunities for US Bancorp and First Community
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between USB-PH and First is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Financial has no effect on the direction of US Bancorp i.e., US Bancorp and First Community go up and down completely randomly.
Pair Corralation between US Bancorp and First Community
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.16 times more return on investment than First Community. However, US Bancorp is 6.33 times less risky than First Community. It trades about 0.33 of its potential returns per unit of risk. First Community Financial is currently generating about -0.15 per unit of risk. If you would invest 2,185 in US Bancorp on August 29, 2024 and sell it today you would earn a total of 74.00 from holding US Bancorp or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. First Community Financial
Performance |
| Timeline |
| US Bancorp |
| First Community Financial |
US Bancorp and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and First Community
The main advantage of trading using opposite US Bancorp and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| US Bancorp vs. Capital One Financial | US Bancorp vs. Capital One Financial | US Bancorp vs. Bank of America | US Bancorp vs. KeyCorp |
| First Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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