Correlation Between US Bancorp and CCCB Bancorp

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

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

Diversification Opportunities for US Bancorp and CCCB Bancorp

0.66

Correlation Coefficient

US Bancorp  CCCB Bancorp

Poor diversification

The 3 months correlation between USB-PH and CCCB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and CCCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCCB Bancorp 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 CCCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCCB Bancorp has no effect on the direction of US Bancorp i.e., US Bancorp and CCCB Bancorp go up and down completely randomly.

Pair Corralation between US Bancorp and CCCB Bancorp

Assuming the 90 days trading horizon US Bancorp is expected to generate 1.58 times less return on investment than CCCB Bancorp. But when comparing it to its historical volatility, US Bancorp is 5.84 times less risky than CCCB Bancorp. It trades about 0.19 of its potential returns per unit of risk. CCCB Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  492.00  in CCCB Bancorp on September 13, 2024 and sell it today you would earn a total of  35.00  from holding CCCB Bancorp or generate 7.11% return on investment over 90 days.

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

US Bancorp  vs.  CCCB Bancorp

US Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, US Bancorp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CCCB Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CCCB Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CCCB Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with US Bancorp and CCCB Bancorp

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

The idea behind US Bancorp and CCCB 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.