Correlation Between US Bancorp and China Merchants

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both US Bancorp and China Merchants 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 China Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and China Merchants Bank, you can compare the effects of market volatilities on US Bancorp and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and China Merchants.

Diversification Opportunities for US Bancorp and China Merchants

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between US Bancorp and China is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of US Bancorp i.e., US Bancorp and China Merchants go up and down completely randomly.

Pair Corralation between US Bancorp and China Merchants

Considering the 90-day investment horizon US Bancorp is expected to under-perform the China Merchants. In addition to that, US Bancorp is 1.03 times more volatile than China Merchants Bank. It trades about -0.23 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.17 per unit of volatility. If you would invest  3,118  in China Merchants Bank on April 2, 2022 and sell it today you would earn a total of  202.00  from holding China Merchants Bank or generate 6.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

US Bancorp  vs.  China Merchants Bank

 Performance (%) 
      Timeline 
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 latest weak 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.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0392
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

China Merchants Bank 
China Performance
0 of 100
Over the last 90 days China Merchants Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in August 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
0.0374
Payout Ratio
0.68
Forward Annual Dividend Rate
1.14
Dividend Date
2022-08-25
Ex Dividend Date
2022-07-06

China Price Channel

US Bancorp and China Merchants Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with US Bancorp and China Merchants

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

China Merchants Bank

Pair trading matchups for China Merchants

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go