Correlation Between Truist Financial and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Arrow 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 Arrow 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 Arrow Financial, you can compare the effects of market volatilities on Truist Financial and Arrow 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 Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Arrow Financial.
Diversification Opportunities for Truist Financial and Arrow Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Arrow is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial 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 Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Truist Financial i.e., Truist Financial and Arrow Financial go up and down completely randomly.
Pair Corralation between Truist Financial and Arrow Financial
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Arrow Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 3.1 times less risky than Arrow Financial. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Arrow Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,988 in Arrow Financial on August 26, 2024 and sell it today you would earn a total of 357.00 from holding Arrow Financial or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Arrow Financial
Performance |
| Timeline |
| Truist Financial |
| Arrow Financial |
Truist Financial and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Arrow Financial
The main advantage of trading using opposite Truist Financial and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Arrow 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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