Correlation Between US Bancorp and SPDR Series
Can any of the company-specific risk be diversified away by investing in both US Bancorp and SPDR Series 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 SPDR Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and SPDR Series Trust, you can compare the effects of market volatilities on US Bancorp and SPDR Series 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 SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and SPDR Series.
Diversification Opportunities for US Bancorp and SPDR Series
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USB and SPDR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of US Bancorp i.e., US Bancorp and SPDR Series go up and down completely randomly.
Pair Corralation between US Bancorp and SPDR Series
Assuming the 90 days trading horizon US Bancorp is expected to generate 1.33 times more return on investment than SPDR Series. However, US Bancorp is 1.33 times more volatile than SPDR Series Trust. It trades about 0.17 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.09 per unit of risk. If you would invest 68,203 in US Bancorp on September 2, 2024 and sell it today you would earn a total of 33,347 from holding US Bancorp or generate 48.89% 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. SPDR Series Trust
Performance |
| Timeline |
| US Bancorp |
| SPDR Series Trust |
US Bancorp and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and SPDR Series
The main advantage of trading using opposite US Bancorp and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, SPDR Series 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 SPDR Series will offset losses from the drop in SPDR Series' long position.| US Bancorp vs. Ross Stores | US Bancorp vs. Micron Technology | US Bancorp vs. KB Home | US Bancorp vs. DXC Technology |
| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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