Correlation Between US Bancorp and Caixabank
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Caixabank 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 Caixabank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Caixabank SA ADR, you can compare the effects of market volatilities on US Bancorp and Caixabank 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 Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Caixabank.
Diversification Opportunities for US Bancorp and Caixabank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USB-PH and Caixabank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Caixabank SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank SA ADR 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 Caixabank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank SA ADR has no effect on the direction of US Bancorp i.e., US Bancorp and Caixabank go up and down completely randomly.
Pair Corralation between US Bancorp and Caixabank
Assuming the 90 days trading horizon US Bancorp is expected to generate 6.12 times less return on investment than Caixabank. But when comparing it to its historical volatility, US Bancorp is 3.36 times less risky than Caixabank. It trades about 0.11 of its potential returns per unit of risk. Caixabank SA ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 138.00 in Caixabank SA ADR on February 28, 2024 and sell it today you would earn a total of 44.00 from holding Caixabank SA ADR or generate 31.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
US Bancorp vs. Caixabank SA ADR
Performance |
Timeline |
US Bancorp |
Caixabank SA ADR |
US Bancorp and Caixabank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with US Bancorp and Caixabank
The main advantage of trading using opposite US Bancorp and Caixabank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Caixabank 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 Caixabank will offset losses from the drop in Caixabank's long position.US Bancorp vs. Merchants Bancorp | US Bancorp vs. CNB Financial | US Bancorp vs. Pinnacle Financial Partners | US Bancorp vs. OceanFirst Financial Corp |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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