Correlation Between Hilltop Holdings and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Hilltop Holdings 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 Hilltop Holdings and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilltop Holdings and US Bancorp, you can compare the effects of market volatilities on Hilltop Holdings 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 Hilltop Holdings with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilltop Holdings and US Bancorp.
Diversification Opportunities for Hilltop Holdings and US Bancorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hilltop and UB5 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hilltop Holdings and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Hilltop Holdings 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 Hilltop Holdings 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 Hilltop Holdings i.e., Hilltop Holdings and US Bancorp go up and down completely randomly.
Pair Corralation between Hilltop Holdings and US Bancorp
Assuming the 90 days horizon Hilltop Holdings is expected to generate 3.32 times less return on investment than US Bancorp. In addition to that, Hilltop Holdings is 1.17 times more volatile than US Bancorp. It trades about 0.04 of its total potential returns per unit of risk. US Bancorp is currently generating about 0.16 per unit of volatility. If you would invest 4,125 in US Bancorp on September 4, 2024 and sell it today you would earn a total of 880.00 from holding US Bancorp or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilltop Holdings vs. US Bancorp
Performance |
| Timeline |
| Hilltop Holdings |
| US Bancorp |
Hilltop Holdings and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilltop Holdings and US Bancorp
The main advantage of trading using opposite Hilltop Holdings and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilltop Holdings 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.| Hilltop Holdings vs. US Bancorp | Hilltop Holdings vs. The PNC Financial | Hilltop Holdings vs. Fifth Third Bancorp | Hilltop Holdings vs. Regions Financial |
| US Bancorp vs. Compagnie Plastic Omnium | US Bancorp vs. NEWELL RUBBERMAID | US Bancorp vs. Martin Marietta Materials | US Bancorp vs. QINGCI GAMES INC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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