Correlation Between Tectonic Financial and Trustmark
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Trustmark 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 Tectonic Financial and Trustmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and Trustmark, you can compare the effects of market volatilities on Tectonic Financial and Trustmark 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 Tectonic Financial with a short position of Trustmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Trustmark.
Diversification Opportunities for Tectonic Financial and Trustmark
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tectonic and Trustmark is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark and Tectonic 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 Tectonic Financial PR are associated (or correlated) with Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Trustmark go up and down completely randomly.
Pair Corralation between Tectonic Financial and Trustmark
Assuming the 90 days horizon Tectonic Financial is expected to generate 7.08 times less return on investment than Trustmark. But when comparing it to its historical volatility, Tectonic Financial PR is 3.01 times less risky than Trustmark. It trades about 0.05 of its potential returns per unit of risk. Trustmark is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,297 in Trustmark on September 2, 2024 and sell it today you would earn a total of 614.00 from holding Trustmark or generate 18.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Trustmark
Performance |
| Timeline |
| Tectonic Financial |
| Trustmark |
Tectonic Financial and Trustmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Trustmark
The main advantage of trading using opposite Tectonic Financial and Trustmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Trustmark 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 Trustmark will offset losses from the drop in Trustmark's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
| Trustmark vs. Home Bancorp | Trustmark vs. First Business Financial | Trustmark vs. LINKBANCORP | Trustmark vs. Great Southern 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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