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 PERP, 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
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TFS and USB-PA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TFS Financial 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 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 PERP 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 1.25 times less return on investment than US Bancorp. In addition to that, TFS Financial is 1.38 times more volatile than US Bancorp PERP. It trades about 0.08 of its total potential returns per unit of risk. US Bancorp PERP is currently generating about 0.13 per unit of volatility. If you would invest 73,685 in US Bancorp PERP on December 29, 2023 and sell it today you would earn a total of 14,465 from holding US Bancorp PERP or generate 19.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TFS Financial vs. US Bancorp PERP
Performance |
Timeline |
TFS Financial |
US Bancorp PERP |
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. Middlefield Banc | TFS Financial vs. Mercantile Bank | TFS Financial vs. MetroCity Bankshares | TFS Financial vs. Macatawa Bank |
US Bancorp vs. Middlefield Banc | US Bancorp vs. Merchants Bancorp | US Bancorp vs. Mercantile Bank | US Bancorp vs. MetroCity Bankshares |
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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