Correlation Between Truist Financial and BankFinancial
Can any of the company-specific risk be diversified away by investing in both Truist Financial and BankFinancial 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 BankFinancial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and BankFinancial, you can compare the effects of market volatilities on Truist Financial and BankFinancial 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 BankFinancial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and BankFinancial.
Diversification Opportunities for Truist Financial and BankFinancial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and BankFinancial is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial 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 BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of Truist Financial i.e., Truist Financial and BankFinancial go up and down completely randomly.
Pair Corralation between Truist Financial and BankFinancial
Assuming the 90 days trading horizon Truist Financial is expected to generate 3.98 times less return on investment than BankFinancial. But when comparing it to its historical volatility, Truist Financial is 2.15 times less risky than BankFinancial. It trades about 0.07 of its potential returns per unit of risk. BankFinancial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 984.00 in BankFinancial on August 28, 2024 and sell it today you would earn a total of 306.00 from holding BankFinancial or generate 31.1% 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. BankFinancial
Performance |
| Timeline |
| Truist Financial |
| BankFinancial |
Truist Financial and BankFinancial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and BankFinancial
The main advantage of trading using opposite Truist Financial and BankFinancial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, BankFinancial 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 BankFinancial will offset losses from the drop in BankFinancial's long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial vs. Community West Bancshares |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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