Correlation Between US Bancorp and Megaworld Corp
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Megaworld Corp 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 US Bancorp and Megaworld Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp PERP and Megaworld Corp ADR, you can compare the effects of market volatilities on US Bancorp and Megaworld Corp 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 US Bancorp with a short position of Megaworld Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Megaworld Corp.
Diversification Opportunities for US Bancorp and Megaworld Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USB-PA and Megaworld is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp PERP and Megaworld Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megaworld Corp ADR and US Bancorp 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 US Bancorp PERP are associated (or correlated) with Megaworld Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megaworld Corp ADR has no effect on the direction of US Bancorp i.e., US Bancorp and Megaworld Corp go up and down completely randomly.
Pair Corralation between US Bancorp and Megaworld Corp
Assuming the 90 days trading horizon US Bancorp PERP is expected to generate 0.22 times more return on investment than Megaworld Corp. However, US Bancorp PERP is 4.48 times less risky than Megaworld Corp. It trades about -0.01 of its potential returns per unit of risk. Megaworld Corp ADR is currently generating about -0.2 per unit of risk. If you would invest 86,350 in US Bancorp PERP on February 2, 2024 and sell it today you would lose (150.00) from holding US Bancorp PERP or give up 0.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
US Bancorp PERP vs. Megaworld Corp ADR
Performance |
Timeline |
US Bancorp PERP |
Megaworld Corp ADR |
US Bancorp and Megaworld Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with US Bancorp and Megaworld Corp
The main advantage of trading using opposite US Bancorp and Megaworld Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Megaworld Corp 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 Megaworld Corp will offset losses from the drop in Megaworld Corp's long position.US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial | US Bancorp vs. Regions Financial | US Bancorp vs. KeyCorp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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