Correlation Between Atlas Salt and US Bancorp

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

Diversification Opportunities for Atlas Salt and US Bancorp

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Atlas and US Bancorp is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Salt and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and Atlas Salt 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 Atlas Salt 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 Atlas Salt i.e., Atlas Salt and US Bancorp go up and down completely randomly.

Pair Corralation between Atlas Salt and US Bancorp

Assuming the 90 days horizon Atlas Salt is expected to generate 7.94 times more return on investment than US Bancorp. However, Atlas Salt is 7.94 times more volatile than US Bancorp. It trades about 0.16 of its potential returns per unit of risk. US Bancorp is currently generating about 0.09 per unit of risk. If you would invest  170.00  in Atlas Salt on May 16, 2022 and sell it today you would earn a total of  123.00  from holding Atlas Salt or generate 72.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Atlas Salt  vs.  US Bancorp

 Performance (%) 
       Timeline  
Atlas Salt 
Atlas Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Salt are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Atlas Salt exhibited solid returns over the last few months and may actually be approaching a breakup point.

Atlas Price Channel

US Bancorp 
US Bancorp Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, US Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

US Bancorp Price Channel

Atlas Salt and US Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlas Salt and US Bancorp

The main advantage of trading using opposite Atlas Salt and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Salt 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.

Atlas Salt

Pair trading matchups for Atlas Salt

The idea behind Atlas Salt 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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