Correlation Between US Bancorp and Israel Discount
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Israel Discount 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 Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Israel Discount Bank, you can compare the effects of market volatilities on US Bancorp and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Israel Discount.
Diversification Opportunities for US Bancorp and Israel Discount
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USB-PH and Israel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of US Bancorp i.e., US Bancorp and Israel Discount go up and down completely randomly.
Pair Corralation between US Bancorp and Israel Discount
Assuming the 90 days trading horizon US Bancorp is expected to generate 4.91 times less return on investment than Israel Discount. But when comparing it to its historical volatility, US Bancorp is 5.92 times less risky than Israel Discount. It trades about 0.05 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,766 in Israel Discount Bank on November 2, 2024 and sell it today you would earn a total of 1,434 from holding Israel Discount Bank or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.96% |
| Values | Daily Returns |
US Bancorp vs. Israel Discount Bank
Performance |
| Timeline |
| US Bancorp |
| Israel Discount Bank |
US Bancorp and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Israel Discount
The main advantage of trading using opposite US Bancorp and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.| US Bancorp vs. Fifth Third Bancorp | US Bancorp vs. Huntington Bancshares Incorporated | US Bancorp vs. Washington Federal | US Bancorp vs. Fifth Third Bancorp |
| Israel Discount vs. Baraboo Bancorporation | Israel Discount vs. Schweizerische Nationalbank | Israel Discount vs. Danske Bank AS | Israel Discount vs. Absa Group Limited |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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