Correlation Between Wells Fargo and US Bancorp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and US Bancorp, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and US Bancorp.

Diversification Opportunities for Wells Fargo and US Bancorp

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Wells and USB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Wells Fargo 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 Wells Fargo 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 Wells Fargo i.e., Wells Fargo and US Bancorp go up and down completely randomly.

Pair Corralation between Wells Fargo and US Bancorp

Considering the 90-day investment horizon Wells Fargo is expected to generate 1.27 times less return on investment than US Bancorp. But when comparing it to its historical volatility, Wells Fargo is 1.78 times less risky than US Bancorp. It trades about 0.26 of its potential returns per unit of risk. US Bancorp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,137  in US Bancorp on December 29, 2023 and sell it today you would earn a total of  263.00  from holding US Bancorp or generate 6.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Wells Fargo  vs.  US Bancorp

 Performance 
       Timeline  
Wells Fargo 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.
US Bancorp 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, US Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo and US Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wells Fargo and US Bancorp

The main advantage of trading using opposite Wells Fargo and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.
The idea behind Wells Fargo and US Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Fundamental Analysis
View fundamental data based on most recent published financial statements
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance