Correlation Between US Bancorp and Eurobank Ergasias
Can any of the company-specific risk be diversified away by investing in both US Bancorp and Eurobank Ergasias 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 Eurobank Ergasias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and Eurobank Ergasias Services, you can compare the effects of market volatilities on US Bancorp and Eurobank Ergasias 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 Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Eurobank Ergasias.
Diversification Opportunities for US Bancorp and Eurobank Ergasias
0.49 | Correlation Coefficient |
Very weak diversification
The 7 months correlation between USB-PH and Eurobank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of US Bancorp i.e., US Bancorp and Eurobank Ergasias go up and down completely randomly.
Pair Corralation between US Bancorp and Eurobank Ergasias
Assuming the 90 days trading horizon US Bancorp is expected to under-perform the Eurobank Ergasias. But the preferred stock apears to be less risky and, when comparing its historical volatility, US Bancorp is 3.99 times less risky than Eurobank Ergasias. The preferred stock trades about -0.14 of its potential returns per unit of risk. The Eurobank Ergasias Services is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Eurobank Ergasias Services on February 7, 2024 and sell it today you would earn a total of 42.00 from holding Eurobank Ergasias Services or generate 24.28% return on investment over 90 days.
Time Period | 7 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
US Bancorp vs. Eurobank Ergasias Services
Performance |
Timeline |
US Bancorp |
Eurobank Ergasias |
US Bancorp and Eurobank Ergasias Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with US Bancorp and Eurobank Ergasias
The main advantage of trading using opposite US Bancorp and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp position performs unexpectedly, Eurobank Ergasias 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 Eurobank Ergasias will offset losses from the drop in Eurobank Ergasias' long position.US Bancorp vs. Citizens Financial Group | US Bancorp vs. Capital One Financial | US Bancorp vs. Capital One Financial | US Bancorp vs. Bank of America |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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