Correlation Between ST Bancorp and US Bancorp
Can any of the company-specific risk be diversified away by investing in both ST Bancorp 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 ST Bancorp and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and US Bancorp PERP, you can compare the effects of market volatilities on ST Bancorp 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 ST Bancorp with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and US Bancorp.
Diversification Opportunities for ST Bancorp and US Bancorp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STBA and USB-PA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp 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 ST 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 ST Bancorp 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 ST Bancorp i.e., ST Bancorp and US Bancorp go up and down completely randomly.
Pair Corralation between ST Bancorp and US Bancorp
Given the investment horizon of 90 days ST Bancorp is expected to generate 1.7 times more return on investment than US Bancorp. However, ST Bancorp is 1.7 times more volatile than US Bancorp PERP. It trades about 0.04 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 3,074 in ST Bancorp on January 25, 2024 and sell it today you would earn a total of 41.00 from holding ST Bancorp or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. US Bancorp PERP
Performance |
| Timeline |
| ST Bancorp |
| US Bancorp PERP |
ST Bancorp and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and US Bancorp
The main advantage of trading using opposite ST Bancorp and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp 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.| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares | ST Bancorp vs. First Bancorp |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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