Correlation Between US Bancorp and Technos SA
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Technos SA 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 Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Technos SA, you can compare the effects of market volatilities on US Bancorp and Technos SA 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 Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Technos SA.
Diversification Opportunities for US Bancorp and Technos SA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USBC34 and Technos is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA 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 Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of US Bancorp i.e., US Bancorp and Technos SA go up and down completely randomly.
Pair Corralation between US Bancorp and Technos SA
Assuming the 90 days trading horizon US Bancorp is expected to generate 2.2 times less return on investment than Technos SA. In addition to that, US Bancorp is 1.04 times more volatile than Technos SA. It trades about 0.04 of its total potential returns per unit of risk. Technos SA is currently generating about 0.09 per unit of volatility. If you would invest 195.00 in Technos SA on August 30, 2024 and sell it today you would earn a total of 365.00 from holding Technos SA or generate 187.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.38% |
| Values | Daily Returns |
US Bancorp vs. Technos SA
Performance |
| Timeline |
| US Bancorp |
| Technos SA |
US Bancorp and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Technos SA
The main advantage of trading using opposite US Bancorp and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA's long position.| US Bancorp vs. Tyson Foods | US Bancorp vs. Apartment Investment and | US Bancorp vs. Warner Music Group | US Bancorp vs. Multilaser Industrial SA |
| Technos SA vs. Paycom Software | Technos SA vs. MAHLE Metal Leve | Technos SA vs. Metalurgica Gerdau SA | Technos SA vs. Take Two Interactive Software |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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