Correlation Between Amada and US Bancorp

Can any of the company-specific risk be diversified away by investing in both Amada 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 Amada and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amada Co and US Bancorp PERP, you can compare the effects of market volatilities on Amada 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 Amada with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amada and US Bancorp.

Diversification Opportunities for Amada and US Bancorp

0.0

Correlation Coefficient

Amada  US Bancorp

Pay attention - limited upside

The 3 months correlation between Amada and USB-PA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amada Co 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 Amada 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 Amada Co 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 Amada i.e., Amada and US Bancorp go up and down completely randomly.

Pair Corralation between Amada and US Bancorp

If you would invest (100.00) in Amada Co on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Amada Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Amada Co  vs.  US Bancorp PERP

Amada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amada Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amada is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

US Bancorp PERP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp PERP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, US Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amada and US Bancorp

The main advantage of trading using opposite Amada and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amada 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 Amada Co and US Bancorp PERP 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.