Correlation Between Postal Savings and Truist Financial
Can any of the company-specific risk be diversified away by investing in both Postal Savings and Truist Financial 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 Postal Savings and Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Truist Financial, you can compare the effects of market volatilities on Postal Savings and Truist Financial 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 Postal Savings with a short position of Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Truist Financial.
Diversification Opportunities for Postal Savings and Truist Financial
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Postal and Truist is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and Postal Savings 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 Postal Savings Bank are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of Postal Savings i.e., Postal Savings and Truist Financial go up and down completely randomly.
Pair Corralation between Postal Savings and Truist Financial
Assuming the 90 days horizon Postal Savings is expected to generate 6.76 times less return on investment than Truist Financial. But when comparing it to its historical volatility, Postal Savings Bank is 1.47 times less risky than Truist Financial. It trades about 0.06 of its potential returns per unit of risk. Truist Financial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,862 in Truist Financial on September 4, 2024 and sell it today you would earn a total of 634.00 from holding Truist Financial or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Postal Savings Bank vs. Truist Financial
Performance |
| Timeline |
| Postal Savings Bank |
| Truist Financial |
Postal Savings and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Truist Financial
The main advantage of trading using opposite Postal Savings and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.| Postal Savings vs. CAIXABANK UNADR 13 | Postal Savings vs. Superior Plus Corp | Postal Savings vs. NMI Holdings | Postal Savings vs. Origin Agritech |
| Truist Financial vs. Postal Savings Bank | Truist Financial vs. CAIXABANK UNADR 13 | Truist Financial vs. Superior Plus Corp | Truist Financial vs. NMI Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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