Correlation Between Huntington Bancshares and US Bancorp

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

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

Diversification Opportunities for Huntington Bancshares and US Bancorp

0.92

Correlation Coefficient

Huntington Bancshares  US Bancorp

Almost no diversification

The 3 months correlation between Huntington and USB is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Huntington Bancshares 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 Huntington Bancshares Incorporated 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 Huntington Bancshares i.e., Huntington Bancshares and US Bancorp go up and down completely randomly.

Pair Corralation between Huntington Bancshares and US Bancorp

Given the investment horizon of 90 days Huntington Bancshares Incorporated is expected to generate 0.88 times more return on investment than US Bancorp. However, Huntington Bancshares Incorporated is 1.14 times less risky than US Bancorp. It trades about -0.09 of its potential returns per unit of risk. US Bancorp is currently generating about -0.11 per unit of risk. If you would invest  1,616  in Huntington Bancshares Incorporated on December 29, 2024 and sell it today you would lose (137.00) from holding Huntington Bancshares Incorporated or give up 8.48% of portfolio value over 90 days.

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

Huntington Bancshares Incorpor  vs.  US Bancorp

Huntington Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huntington Bancshares Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Huntington Bancshares and US Bancorp

The main advantage of trading using opposite Huntington Bancshares and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares 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.

The idea behind Huntington Bancshares Incorporated and US Bancorp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.