Correlation Between US Bancorp and Mars Bancorp

Can any of the company-specific risk be diversified away by investing in both US Bancorp and Mars 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 Mars 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 Mars Bancorp, you can compare the effects of market volatilities on US Bancorp and Mars 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 Mars Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Mars Bancorp.

Diversification Opportunities for US Bancorp and Mars Bancorp

-0.4

Correlation Coefficient

US Bancorp  Mars Bancorp

Very good diversification

The 3 months correlation between USB-PH and Mars is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Mars Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars 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 Mars Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Bancorp has no effect on the direction of US Bancorp i.e., US Bancorp and Mars Bancorp go up and down completely randomly.

Pair Corralation between US Bancorp and Mars Bancorp

If you would invest  2,110  in US Bancorp on September 2, 2024 and sell it today you would earn a total of  198.00  from holding US Bancorp or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

US Bancorp  vs.  Mars Bancorp

US Bancorp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, US Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mars Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mars Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Mars Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with US Bancorp and Mars Bancorp

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

The idea behind US Bancorp and Mars 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.