Correlation Between US Financial and Power Financial

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

By analyzing existing cross correlation between US Financial 15 and Power Financial Corp, you can compare the effects of market volatilities on US Financial and Power Financial 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 Financial with a short position of Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Power Financial.

Diversification Opportunities for US Financial and Power Financial

0.82

Correlation Coefficient

US Financial  Power Financial

Very poor diversification

The 3 months correlation between FTU-PB and Power is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial Corp and US 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 US Financial 15 are associated (or correlated) with Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of US Financial i.e., US Financial and Power Financial go up and down completely randomly.

Pair Corralation between US Financial and Power Financial

Assuming the 90 days trading horizon US Financial is expected to generate 2.76 times less return on investment than Power Financial. In addition to that, US Financial is 5.04 times more volatile than Power Financial Corp. It trades about 0.02 of its total potential returns per unit of risk. Power Financial Corp is currently generating about 0.27 per unit of volatility. If you would invest  2,419  in Power Financial Corp on July 2, 2025 and sell it today you would earn a total of  104.00  from holding Power Financial Corp or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

US Financial 15  vs.  Power Financial Corp

US Financial 15

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, US Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Power Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Power Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Financial and Power Financial

The main advantage of trading using opposite US Financial and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.

The idea behind US Financial 15 and Power Financial Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.