Correlation Between US Bancorp and WSDMTR ERNGS

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

By analyzing existing cross correlation between US Bancorp and WSDMTR ERNGS 500, you can compare the effects of market volatilities on US Bancorp and WSDMTR ERNGS 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 WSDMTR ERNGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and WSDMTR ERNGS.

Diversification Opportunities for US Bancorp and WSDMTR ERNGS

0.77

Correlation Coefficient

US Bancorp  WSDMTR ERNGS

Poor diversification

The 3 months correlation between USB and WSDMTR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and WSDMTR ERNGS 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSDMTR ERNGS 500 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 WSDMTR ERNGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSDMTR ERNGS 500 has no effect on the direction of US Bancorp i.e., US Bancorp and WSDMTR ERNGS go up and down completely randomly.

Pair Corralation between US Bancorp and WSDMTR ERNGS

Assuming the 90 days trading horizon US Bancorp is expected to generate 1.71 times less return on investment than WSDMTR ERNGS. In addition to that, US Bancorp is 1.33 times more volatile than WSDMTR ERNGS 500. It trades about 0.13 of its total potential returns per unit of risk. WSDMTR ERNGS 500 is currently generating about 0.3 per unit of volatility. If you would invest  5,252  in WSDMTR ERNGS 500 on April 23, 2025 and sell it today you would earn a total of  1,233  from holding WSDMTR ERNGS 500 or generate 23.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

US Bancorp  vs.  WSDMTR ERNGS 500

US Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, US Bancorp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

WSDMTR ERNGS 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WSDMTR ERNGS 500 are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, WSDMTR ERNGS showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Bancorp and WSDMTR ERNGS

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

The idea behind US Bancorp and WSDMTR ERNGS 500 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.