Correlation Between US Bancorp and Permanent TSB
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Permanent TSB 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 Permanent TSB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Permanent TSB Group, you can compare the effects of market volatilities on US Bancorp and Permanent TSB 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 Permanent TSB. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Permanent TSB.
Diversification Opportunities for US Bancorp and Permanent TSB
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USB-PH and Permanent is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Permanent TSB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permanent TSB Group 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 Permanent TSB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permanent TSB Group has no effect on the direction of US Bancorp i.e., US Bancorp and Permanent TSB go up and down completely randomly.
Pair Corralation between US Bancorp and Permanent TSB
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.2 times more return on investment than Permanent TSB. However, US Bancorp is 5.03 times less risky than Permanent TSB. It trades about 0.14 of its potential returns per unit of risk. Permanent TSB Group is currently generating about -0.11 per unit of risk. If you would invest 1,543 in US Bancorp on August 30, 2024 and sell it today you would earn a total of 716.00 from holding US Bancorp or generate 46.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 32.49% |
| Values | Daily Returns |
US Bancorp vs. Permanent TSB Group
Performance |
| Timeline |
| US Bancorp |
| Permanent TSB Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Bancorp and Permanent TSB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Permanent TSB
The main advantage of trading using opposite US Bancorp and Permanent TSB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Permanent TSB 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 Permanent TSB will offset losses from the drop in Permanent TSB'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 |
| Permanent TSB vs. NioCorp Developments Ltd | Permanent TSB vs. Griffon | Permanent TSB vs. Summit Materials | Permanent TSB vs. Western Sierra Mining |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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