Correlation Between US Bancorp and Infosys

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

By analyzing existing cross correlation between US Bancorp and Infosys Ltd ADR, you can compare the effects of market volatilities on US Bancorp and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Infosys.

Diversification Opportunities for US Bancorp and Infosys

-0.54

Correlation Coefficient

US Bancorp  Infosys

Excellent diversification

The 3 months correlation between USB-PH and Infosys is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd 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 are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of US Bancorp i.e., US Bancorp and Infosys go up and down completely randomly.

Pair Corralation between US Bancorp and Infosys

Assuming the 90 days trading horizon US Bancorp is expected to under-perform the Infosys. But the preferred stock apears to be less risky and, when comparing its historical volatility, US Bancorp is 2.24 times less risky than Infosys. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Infosys Ltd ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,732  in Infosys Ltd ADR on April 29, 2025 and sell it today you would earn a total of  5.00  from holding Infosys Ltd ADR or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

US Bancorp  vs.  Infosys Ltd ADR

US Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, US Bancorp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Infosys Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Bancorp and Infosys

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

The idea behind US Bancorp and Infosys Ltd ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.