Correlation Between Saratoga Investment and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment 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 Saratoga Investment and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and US Bancorp PERP, you can compare the effects of market volatilities on Saratoga Investment 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 Saratoga Investment with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and US Bancorp.
Diversification Opportunities for Saratoga Investment and US Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saratoga and USB-PA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp 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 Saratoga Investment 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 Saratoga Investment Corp 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 Saratoga Investment i.e., Saratoga Investment and US Bancorp go up and down completely randomly.
Pair Corralation between Saratoga Investment and US Bancorp
Considering the 90-day investment horizon Saratoga Investment Corp is expected to generate 0.64 times more return on investment than US Bancorp. However, Saratoga Investment Corp is 1.57 times less risky than US Bancorp. It trades about 0.12 of its potential returns per unit of risk. US Bancorp PERP is currently generating about 0.06 per unit of risk. If you would invest 2,286 in Saratoga Investment Corp on January 25, 2024 and sell it today you would earn a total of 45.00 from holding Saratoga Investment Corp or generate 1.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Saratoga Investment Corp vs. US Bancorp PERP
Performance |
Timeline |
Saratoga Investment Corp |
US Bancorp PERP |
Saratoga Investment and US Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Saratoga Investment and US Bancorp
The main advantage of trading using opposite Saratoga Investment and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment 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.Saratoga Investment vs. New Mountain Finance | Saratoga Investment vs. BlackRock TCP Capital | Saratoga Investment vs. Carlyle Secured Lending | Saratoga Investment vs. Sixth Street Specialty |
US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial | US Bancorp vs. Citizens Financial Group | US Bancorp vs. US Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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