Correlation Between US Bancorp and Lifestore Financial
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Lifestore 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 Lifestore 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 Lifestore Financial Group, you can compare the effects of market volatilities on US Bancorp and Lifestore 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 Lifestore Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Lifestore Financial.
Diversification Opportunities for US Bancorp and Lifestore Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB-PH and Lifestore is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Lifestore Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestore 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 Lifestore Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestore Financial has no effect on the direction of US Bancorp i.e., US Bancorp and Lifestore Financial go up and down completely randomly.
Pair Corralation between US Bancorp and Lifestore Financial
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.32 times more return on investment than Lifestore Financial. However, US Bancorp is 3.1 times less risky than Lifestore Financial. It trades about 0.07 of its potential returns per unit of risk. Lifestore Financial Group is currently generating about 0.01 per unit of risk. If you would invest 1,665 in US Bancorp on September 5, 2024 and sell it today you would earn a total of 605.00 from holding US Bancorp or generate 36.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.87% |
| Values | Daily Returns |
US Bancorp vs. Lifestore Financial Group
Performance |
| Timeline |
| US Bancorp |
| Lifestore Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Bancorp and Lifestore Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Lifestore Financial
The main advantage of trading using opposite US Bancorp and Lifestore Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Lifestore 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 Lifestore Financial will offset losses from the drop in Lifestore Financial's long position.| US Bancorp vs. Capital One Financial | US Bancorp vs. Bank of America | US Bancorp vs. HUMANA INC | US Bancorp vs. Aquagold International |
| Lifestore Financial vs. NETGEAR | Lifestore Financial vs. Marfrig Global Foods | Lifestore Financial vs. Bridgford Foods | Lifestore Financial vs. Uber Technologies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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