Correlation Between US Bancorp and Bank Leumi

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

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

Diversification Opportunities for US Bancorp and Bank Leumi

0.57

Correlation Coefficient

US Bancorp  Bank Leumi

Very weak diversification

The 3 months correlation between USB-PA and Bank is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp PERP and Bank Leumi Le in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le 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 PERP are associated (or correlated) with Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le has no effect on the direction of US Bancorp i.e., US Bancorp and Bank Leumi go up and down completely randomly.

Pair Corralation between US Bancorp and Bank Leumi

If you would invest  83,066  in US Bancorp PERP on September 5, 2024 and sell it today you would earn a total of  3,634  from holding US Bancorp PERP or generate 4.37% return on investment over 90 days.

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

US Bancorp PERP  vs.  Bank Leumi Le

US Bancorp PERP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp PERP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, US Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bank Leumi Le

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Leumi Le has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Bank Leumi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with US Bancorp and Bank Leumi

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

The idea behind US Bancorp PERP and Bank Leumi Le 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.