Correlation Between Western New and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Western New and US 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 Western New and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western New England and US Bancorp, you can compare the effects of market volatilities on Western New and US 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 Western New with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western New and US Bancorp.
Diversification Opportunities for Western New and US Bancorp
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and USB-PR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western New England and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Western New 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 Western New England are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of Western New i.e., Western New and US Bancorp go up and down completely randomly.
Pair Corralation between Western New and US Bancorp
Given the investment horizon of 90 days Western New England is expected to generate 1.14 times more return on investment than US Bancorp. However, Western New is 1.14 times more volatile than US Bancorp. It trades about 0.33 of its potential returns per unit of risk. US Bancorp is currently generating about -0.13 per unit of risk. If you would invest 863.00 in Western New England on August 27, 2024 and sell it today you would earn a total of 87.00 from holding Western New England or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western New England vs. US Bancorp
Performance |
| Timeline |
| Western New England |
| US Bancorp |
Western New and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western New and US Bancorp
The main advantage of trading using opposite Western New and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western New position performs unexpectedly, US 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Western New vs. Fifth Third Bancorp | Western New vs. Zions Bancorporation | Western New vs. Huntington Bancshares Incorporated | Western New vs. Comerica |
| US Bancorp vs. US Bancorp | US Bancorp vs. Bank of America | US Bancorp vs. US Bancorp | US Bancorp vs. Wells Fargo |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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