Correlation Between El Al and US Bancorp
Can any of the company-specific risk be diversified away by investing in both El Al 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 El Al and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Al Israel and US Bancorp PERP, you can compare the effects of market volatilities on El Al 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 El Al with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and US Bancorp.
Diversification Opportunities for El Al and US Bancorp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELALF and USB-PA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and US Bancorp PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp PERP and El Al 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 El Al Israel 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 PERP has no effect on the direction of El Al i.e., El Al and US Bancorp go up and down completely randomly.
Pair Corralation between El Al and US Bancorp
Assuming the 90 days horizon El Al is expected to generate 1.22 times less return on investment than US Bancorp. In addition to that, El Al is 3.07 times more volatile than US Bancorp PERP. It trades about 0.04 of its total potential returns per unit of risk. US Bancorp PERP is currently generating about 0.14 per unit of volatility. If you would invest 71,152 in US Bancorp PERP on January 19, 2024 and sell it today you would earn a total of 16,248 from holding US Bancorp PERP or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Al Israel vs. US Bancorp PERP
Performance |
| Timeline |
| El Al Israel |
| US Bancorp PERP |
El Al and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Al and US Bancorp
The main advantage of trading using opposite El Al and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Al 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.| El Al vs. Copa Holdings SA | El Al vs. United Airlines Holdings | El Al vs. Delta Air Lines | El Al vs. SkyWest |
| US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial | US Bancorp vs. US Bancorp | US Bancorp vs. KeyCorp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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