Correlation Between US Bancorp and Nmb Financial
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Nmb 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 Nmb 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 Nmb Financial Corp, you can compare the effects of market volatilities on US Bancorp and Nmb 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 Nmb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Nmb Financial.
Diversification Opportunities for US Bancorp and Nmb Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between USB-PH and Nmb is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Nmb Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nmb Financial Corp 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 Nmb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nmb Financial Corp has no effect on the direction of US Bancorp i.e., US Bancorp and Nmb Financial go up and down completely randomly.
Pair Corralation between US Bancorp and Nmb Financial
Assuming the 90 days trading horizon US Bancorp is expected to generate 5.56 times less return on investment than Nmb Financial. But when comparing it to its historical volatility, US Bancorp is 3.14 times less risky than Nmb Financial. It trades about 0.14 of its potential returns per unit of risk. Nmb Financial Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 836.00 in Nmb Financial Corp on September 3, 2024 and sell it today you would earn a total of 564.00 from holding Nmb Financial Corp or generate 67.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
US Bancorp vs. Nmb Financial Corp
Performance |
| Timeline |
| US Bancorp |
| Nmb Financial Corp |
US Bancorp and Nmb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Nmb Financial
The main advantage of trading using opposite US Bancorp and Nmb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Nmb 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 Nmb Financial will offset losses from the drop in Nmb Financial's long position.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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