Correlation Between TFS Financial and US Bancorp
Can any of the company-specific risk be diversified away by investing in both TFS Financial 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 TFS Financial and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS Financial and US Bancorp, you can compare the effects of market volatilities on TFS Financial 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 TFS Financial with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS Financial and US Bancorp.
Diversification Opportunities for TFS Financial and US Bancorp
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between TFS and USB is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding TFS Financial and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and TFS Financial 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 TFS Financial 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 TFS Financial i.e., TFS Financial and US Bancorp go up and down completely randomly.
Pair Corralation between TFS Financial and US Bancorp
Given the investment horizon of 90 days TFS Financial is expected to generate 0.95 times more return on investment than US Bancorp. However, TFS Financial is 1.05 times less risky than US Bancorp. It trades about -0.02 of its potential returns per unit of risk. US Bancorp is currently generating about -0.13 per unit of risk. If you would invest 1,241 in TFS Financial on January 24, 2024 and sell it today you would lose (11.00) from holding TFS Financial or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS Financial vs. US Bancorp
Performance |
| Timeline |
| TFS Financial |
| US Bancorp |
TFS Financial and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS Financial and US Bancorp
The main advantage of trading using opposite TFS Financial and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS Financial 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.| TFS Financial vs. Cullman Bancorp | TFS Financial vs. Home Federal Bancorp | TFS Financial vs. First Financial Northwest | TFS Financial vs. First Northwest Bancorp |
| US Bancorp vs. KeyCorp | US Bancorp vs. First Mid Illinois | US Bancorp vs. Finwise Bancorp | US Bancorp vs. Home 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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