Correlation Between US Bancorp and Marine Bancorp
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Marine Bancorp 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 Marine Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Marine Bancorp of, you can compare the effects of market volatilities on US Bancorp and Marine Bancorp 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 Marine Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Marine Bancorp.
Diversification Opportunities for US Bancorp and Marine Bancorp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB-PH and Marine is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Marine Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Bancorp 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 Marine Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Bancorp has no effect on the direction of US Bancorp i.e., US Bancorp and Marine Bancorp go up and down completely randomly.
Pair Corralation between US Bancorp and Marine Bancorp
Assuming the 90 days trading horizon US Bancorp is expected to generate 12.15 times more return on investment than Marine Bancorp. However, US Bancorp is 12.15 times more volatile than Marine Bancorp of. It trades about 0.19 of its potential returns per unit of risk. Marine Bancorp of is currently generating about 0.22 per unit of risk. If you would invest 2,225 in US Bancorp on September 12, 2024 and sell it today you would earn a total of 63.00 from holding US Bancorp or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
US Bancorp vs. Marine Bancorp of
Performance |
| Timeline |
| US Bancorp |
| Marine Bancorp |
US Bancorp and Marine Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Marine Bancorp
The main advantage of trading using opposite US Bancorp and Marine Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Marine Bancorp 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 Marine Bancorp will offset losses from the drop in Marine Bancorp'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 |
| Marine Bancorp vs. Mills Music Trust | Marine Bancorp vs. East Africa Metals | Marine Bancorp vs. Chester Mining | Marine Bancorp vs. AKITA Drilling |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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