Correlation Between US Bancorp and Traditions Bank
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Traditions Bank 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 Traditions Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Traditions Bank, you can compare the effects of market volatilities on US Bancorp and Traditions Bank 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 Traditions Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Traditions Bank.
Diversification Opportunities for US Bancorp and Traditions Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB-PH and Traditions is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Traditions Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traditions 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 Traditions Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traditions Bank has no effect on the direction of US Bancorp i.e., US Bancorp and Traditions Bank go up and down completely randomly.
Pair Corralation between US Bancorp and Traditions Bank
Assuming the 90 days trading horizon US Bancorp is expected to generate 8.6 times less return on investment than Traditions Bank. But when comparing it to its historical volatility, US Bancorp is 10.67 times less risky than Traditions Bank. It trades about 0.15 of its potential returns per unit of risk. Traditions Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,686 in Traditions Bank on September 1, 2024 and sell it today you would earn a total of 1,813 from holding Traditions Bank or generate 107.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. Traditions Bank
Performance |
| Timeline |
| US Bancorp |
| Traditions Bank |
US Bancorp and Traditions Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Traditions Bank
The main advantage of trading using opposite US Bancorp and Traditions Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Traditions Bank 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 Traditions Bank will offset losses from the drop in Traditions Bank's long position.| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
| Traditions Bank vs. Piraeus Bank SA | Traditions Bank vs. Turkiye Garanti Bankasi | Traditions Bank vs. Delhi Bank Corp | Traditions Bank vs. Uwharrie Capital Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |