Correlation Between Truist Financial and Coastal Financial
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Coastal 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 Truist Financial and Coastal Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Coastal Financial Corp, you can compare the effects of market volatilities on Truist Financial and Coastal 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 Truist Financial with a short position of Coastal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Coastal Financial.
Diversification Opportunities for Truist Financial and Coastal Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Coastal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Coastal Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Financial Corp and Truist 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 Truist Financial are associated (or correlated) with Coastal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Financial Corp has no effect on the direction of Truist Financial i.e., Truist Financial and Coastal Financial go up and down completely randomly.
Pair Corralation between Truist Financial and Coastal Financial
Assuming the 90 days trading horizon Truist Financial is expected to generate 1.25 times less return on investment than Coastal Financial. But when comparing it to its historical volatility, Truist Financial is 1.75 times less risky than Coastal Financial. It trades about 0.06 of its potential returns per unit of risk. Coastal Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,181 in Coastal Financial Corp on August 24, 2024 and sell it today you would earn a total of 2,488 from holding Coastal Financial Corp or generate 48.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Coastal Financial Corp
Performance |
| Timeline |
| Truist Financial |
| Coastal Financial Corp |
Truist Financial and Coastal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Coastal Financial
The main advantage of trading using opposite Truist Financial and Coastal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Coastal 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 Coastal Financial will offset losses from the drop in Coastal Financial's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. US Bancorp |
| Coastal Financial vs. Affinity Bancshares | Coastal Financial vs. Home Federal Bancorp | Coastal Financial vs. First Business Financial | Coastal Financial vs. Old Point Financial |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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