Correlation Between US Bancorp and Grupo Profuturo

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

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

Diversification Opportunities for US Bancorp and Grupo Profuturo

0.19

Correlation Coefficient

US Bancorp  Grupo Profuturo

Average diversification

The 3 months correlation between USB and Grupo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Grupo Profuturo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Profuturo SAB 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 Grupo Profuturo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Profuturo SAB has no effect on the direction of US Bancorp i.e., US Bancorp and Grupo Profuturo go up and down completely randomly.

Pair Corralation between US Bancorp and Grupo Profuturo

Assuming the 90 days trading horizon US Bancorp is expected to generate 1.75 times more return on investment than Grupo Profuturo. However, US Bancorp is 1.75 times more volatile than Grupo Profuturo SAB. It trades about 0.11 of its potential returns per unit of risk. Grupo Profuturo SAB is currently generating about 0.06 per unit of risk. If you would invest  53,514  in US Bancorp on September 28, 2024 and sell it today you would earn a total of  44,997  from holding US Bancorp or generate 84.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

US Bancorp  vs.  Grupo Profuturo SAB

US Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, US Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Profuturo SAB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with US Bancorp and Grupo Profuturo

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

The idea behind US Bancorp and Grupo Profuturo SAB 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.