Correlation Between Grupo KUO and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Grupo KUO 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 Grupo KUO and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo KUO SAB and US Bancorp, you can compare the effects of market volatilities on Grupo KUO 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 Grupo KUO with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo KUO and US Bancorp.
Diversification Opportunities for Grupo KUO and US Bancorp
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Grupo and USB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Grupo KUO SAB and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Grupo KUO 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 Grupo KUO SAB 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 Grupo KUO i.e., Grupo KUO and US Bancorp go up and down completely randomly.
Pair Corralation between Grupo KUO and US Bancorp
Assuming the 90 days trading horizon Grupo KUO SAB is expected to under-perform the US Bancorp. In addition to that, Grupo KUO is 1.84 times more volatile than US Bancorp. It trades about -0.08 of its total potential returns per unit of risk. US Bancorp is currently generating about -0.04 per unit of volatility. If you would invest 101,550 in US Bancorp on September 23, 2024 and sell it today you would lose (1,100) from holding US Bancorp or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Grupo KUO SAB vs. US Bancorp
Performance |
Timeline |
Grupo KUO SAB |
US Bancorp |
Grupo KUO and US Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grupo KUO and US Bancorp
The main advantage of trading using opposite Grupo KUO and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo KUO 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.Grupo KUO vs. Grupo Mxico SAB | Grupo KUO vs. Fomento Econmico Mexicano | Grupo KUO vs. CEMEX SAB de | Grupo KUO vs. Gruma SAB de |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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