Correlation Between US Bancorp and Orix Corp

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

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

Diversification Opportunities for US Bancorp and Orix Corp

-0.35

Correlation Coefficient

US Bancorp  Orix Corp

Very good diversification

The 3 months correlation between USB and Orix is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of US Bancorp i.e., US Bancorp and Orix Corp go up and down completely randomly.

Pair Corralation between US Bancorp and Orix Corp

Considering the 90-day investment horizon US Bancorp is expected to under-perform the Orix Corp. But the stock apears to be less risky and, when comparing its historical volatility, US Bancorp is 1.13 times less risky than Orix Corp. The stock trades about -0.32 of its potential returns per unit of risk. The Orix Corp Ads is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  10,900  in Orix Corp Ads on September 25, 2024 and sell it today you would lose (299.00) from holding Orix Corp Ads or give up 2.74% of portfolio value over 90 days.

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

US Bancorp  vs.  Orix Corp Ads

US Bancorp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with US Bancorp and Orix Corp

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

The idea behind US Bancorp and Orix Corp Ads 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.