Correlation Between US Bancorp and Cheniere Energy

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

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

Diversification Opportunities for US Bancorp and Cheniere Energy

-0.53

Correlation Coefficient

US Bancorp  Cheniere Energy

Excellent diversification

The 3 months correlation between USB and Cheniere is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of US Bancorp i.e., US Bancorp and Cheniere Energy go up and down completely randomly.

Pair Corralation between US Bancorp and Cheniere Energy

Considering the 90-day investment horizon US Bancorp is expected to generate 0.68 times more return on investment than Cheniere Energy. However, US Bancorp is 1.47 times less risky than Cheniere Energy. It trades about 0.09 of its potential returns per unit of risk. Cheniere Energy is currently generating about 0.0 per unit of risk. If you would invest  4,101  in US Bancorp on May 4, 2025 and sell it today you would earn a total of  293.00  from holding US Bancorp or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

US Bancorp  vs.  Cheniere Energy

US Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, US Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Cheniere Energy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with US Bancorp and Cheniere Energy

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

The idea behind US Bancorp and Cheniere Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..