Correlation Between 1st Capital and US Bancorp
Can any of the company-specific risk be diversified away by investing in both 1st Capital 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 1st Capital and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and US Bancorp, you can compare the effects of market volatilities on 1st Capital 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 1st Capital with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and US Bancorp.
Diversification Opportunities for 1st Capital and US Bancorp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between 1st and USB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and 1st Capital 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 1st Capital Bank 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 1st Capital i.e., 1st Capital and US Bancorp go up and down completely randomly.
Pair Corralation between 1st Capital and US Bancorp
Given the investment horizon of 90 days 1st Capital Bank is expected to under-perform the US Bancorp. But the otc stock apears to be less risky and, when comparing its historical volatility, 1st Capital Bank is 1.97 times less risky than US Bancorp. The otc stock trades about -0.22 of its potential returns per unit of risk. The US Bancorp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,200 in US Bancorp on January 24, 2024 and sell it today you would lose (155.00) from holding US Bancorp or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Capital Bank vs. US Bancorp
Performance |
| Timeline |
| 1st Capital Bank |
| US Bancorp |
1st Capital and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Capital and US Bancorp
The main advantage of trading using opposite 1st Capital and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital 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.| 1st Capital vs. Allspring Global Dividend | 1st Capital vs. BNY Mellon High | 1st Capital vs. Pioneer High Income | 1st Capital vs. Allspring Utilities And |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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