Correlation Between US Bancorp and SPDR Series

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

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

Diversification Opportunities for US Bancorp and SPDR Series

0.88

Correlation Coefficient

US Bancorp  SPDR Series

Very poor diversification

The 3 months correlation between USB and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of US Bancorp i.e., US Bancorp and SPDR Series go up and down completely randomly.

Pair Corralation between US Bancorp and SPDR Series

Assuming the 90 days trading horizon US Bancorp is expected to generate 1.23 times more return on investment than SPDR Series. However, US Bancorp is 1.23 times more volatile than SPDR Series Trust. It trades about 0.13 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.15 per unit of risk. If you would invest  76,158  in US Bancorp on April 22, 2025 and sell it today you would earn a total of  9,597  from holding US Bancorp or generate 12.6% return on investment over 90 days.

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

US Bancorp  vs.  SPDR Series Trust

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.

SPDR Series Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Series Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SPDR Series may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with US Bancorp and SPDR Series

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

The idea behind US Bancorp and SPDR Series Trust 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.