Correlation Between Postal Savings and Huntington Bancshares

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

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

Diversification Opportunities for Postal Savings and Huntington Bancshares

0.53

Correlation Coefficient

Postal Savings  Huntington Bancshares

Very weak diversification

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

Pair Corralation between Postal Savings and Huntington Bancshares

Assuming the 90 days horizon Postal Savings is expected to generate 1.25 times less return on investment than Huntington Bancshares. In addition to that, Postal Savings is 1.08 times more volatile than Huntington Bancshares Incorporated. It trades about 0.13 of its total potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.17 per unit of volatility. If you would invest  1,462  in Huntington Bancshares Incorporated on August 31, 2024 and sell it today you would earn a total of  338.00  from holding Huntington Bancshares Incorporated or generate 23.12% return on investment over 90 days.

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

Postal Savings Bank  vs.  Huntington Bancshares Incorpor

Postal Savings Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Postal Savings reported solid returns over the last few months and may actually be approaching a breakup point.

Huntington Bancshares

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Huntington Bancshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Postal Savings and Huntington Bancshares

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

The idea behind Postal Savings Bank and Huntington Bancshares Incorporated 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.