Correlation Between First Bancorp and Truist Financial
Can any of the company-specific risk be diversified away by investing in both First Bancorp 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 First Bancorp and Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and Truist Financial Corp, you can compare the effects of market volatilities on First Bancorp 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 First Bancorp with a short position of Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and Truist Financial.
Diversification Opportunities for First Bancorp and Truist Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Truist is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and Truist Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial Corp and First 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 First Bancorp 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 Corp has no effect on the direction of First Bancorp i.e., First Bancorp and Truist Financial go up and down completely randomly.
Pair Corralation between First Bancorp and Truist Financial
Given the investment horizon of 90 days First Bancorp is expected to generate 1.23 times more return on investment than Truist Financial. However, First Bancorp is 1.23 times more volatile than Truist Financial Corp. It trades about 0.19 of its potential returns per unit of risk. Truist Financial Corp is currently generating about 0.21 per unit of risk. If you would invest 4,217 in First Bancorp on August 30, 2024 and sell it today you would earn a total of 569.00 from holding First Bancorp or generate 13.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancorp vs. Truist Financial Corp
Performance |
| Timeline |
| First Bancorp |
| Truist Financial Corp |
First Bancorp and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and Truist Financial
The main advantage of trading using opposite First Bancorp and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp 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.| First Bancorp vs. Home Bancorp | First Bancorp vs. First Business Financial | First Bancorp vs. LINKBANCORP | First Bancorp vs. Great Southern Bancorp |
| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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