Correlation Between KB Financial and Truist Financial
Can any of the company-specific risk be diversified away by investing in both KB Financial 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 KB Financial and Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and Truist Financial, you can compare the effects of market volatilities on KB Financial 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 KB Financial with a short position of Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Truist Financial.
Diversification Opportunities for KB Financial and Truist Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KB Financial and Truist is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and KB Financial 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 KB Financial Group 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 KB Financial i.e., KB Financial and Truist Financial go up and down completely randomly.
Pair Corralation between KB Financial and Truist Financial
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.74 times more return on investment than Truist Financial. However, KB Financial is 1.74 times more volatile than Truist Financial. It trades about 0.07 of its potential returns per unit of risk. Truist Financial is currently generating about 0.03 per unit of risk. If you would invest 3,562 in KB Financial Group on August 24, 2024 and sell it today you would earn a total of 3,351 from holding KB Financial Group or generate 94.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Truist Financial
Performance |
| Timeline |
| KB Financial Group |
| Truist Financial |
KB Financial and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Truist Financial
The main advantage of trading using opposite KB Financial and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial 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.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
| Truist Financial vs. US Bancorp | Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock | Truist Financial vs. US Bancorp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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