Correlation Between BRASIL ON and US Bancorp

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Can any of the company-specific risk be diversified away by investing in both BRASIL ON and US 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 BRASIL ON and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRASIL ON NM and US Bancorp, you can compare the effects of market volatilities on BRASIL ON and US 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 BRASIL ON with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRASIL ON and US Bancorp.

Diversification Opportunities for BRASIL ON and US Bancorp

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between BRASIL and US Bancorp is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BRASIL ON NM and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and BRASIL ON 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 BRASIL ON NM are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of BRASIL ON i.e., BRASIL ON and US Bancorp go up and down completely randomly.

Pair Corralation between BRASIL ON and US Bancorp

Assuming the 90 days trading horizon BRASIL ON NM is expected to under-perform the US Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, BRASIL ON NM is 1.48 times less risky than US Bancorp. The stock trades about -0.47 of its potential returns per unit of risk. The US Bancorp is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  5,214  in US Bancorp on March 27, 2022 and sell it today you would lose (462.00)  from holding US Bancorp or give up 8.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

BRASIL ON NM  vs.  US Bancorp

 Performance (%) 
      Timeline 
BRASIL ON NM 
BRASIL Performance
0 of 100
Over the last 90 days BRASIL ON NM has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BRASIL ON is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BRASIL Price Channel

US Bancorp 
US Bancorp Performance
0 of 100
Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0397
Payout Ratio
0.4
Last Split Factor
3:1
Forward Annual Dividend Rate
1.84
Dividend Date
2022-07-15
Ex Dividend Date
2022-06-29
Last Split Date
1999-04-16

US Bancorp Price Channel

BRASIL ON and US Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with BRASIL ON and US Bancorp

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

BRASIL ON NM

Pair trading matchups for BRASIL ON

The idea behind BRASIL ON NM and US 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.
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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