Correlation Between NOW and US Bancorp
Can any of the company-specific risk be diversified away by investing in both NOW 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 NOW and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOW Inc and US Bancorp, you can compare the effects of market volatilities on NOW 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 NOW with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOW and US Bancorp.
Diversification Opportunities for NOW and US Bancorp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NOW and USB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NOW Inc and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and NOW 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 NOW Inc 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 has no effect on the direction of NOW i.e., NOW and US Bancorp go up and down completely randomly.
Pair Corralation between NOW and US Bancorp
If you would invest 23,800 in NOW Inc on September 23, 2024 and sell it today you would earn a total of 0.00 from holding NOW Inc or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NOW Inc vs. US Bancorp
Performance |
Timeline |
NOW Inc |
US Bancorp |
NOW and US Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NOW and US Bancorp
The main advantage of trading using opposite NOW and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOW 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.NOW vs. Grupo Carso SAB | NOW vs. KB Home | NOW vs. Cognizant Technology Solutions | NOW vs. GMxico Transportes SAB |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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