Correlation Between Truist Financial and Blue Ridge
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Blue Ridge 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 Blue Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Blue Ridge Bankshares, you can compare the effects of market volatilities on Truist Financial and Blue Ridge 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 Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Blue Ridge.
Diversification Opportunities for Truist Financial and Blue Ridge
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Blue is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Blue Ridge Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Bankshares 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 Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Bankshares has no effect on the direction of Truist Financial i.e., Truist Financial and Blue Ridge go up and down completely randomly.
Pair Corralation between Truist Financial and Blue Ridge
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Blue Ridge. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 3.76 times less risky than Blue Ridge. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Blue Ridge Bankshares is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 280.00 in Blue Ridge Bankshares on August 29, 2024 and sell it today you would earn a total of 70.00 from holding Blue Ridge Bankshares or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Blue Ridge Bankshares
Performance |
| Timeline |
| Truist Financial |
| Blue Ridge Bankshares |
Truist Financial and Blue Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Blue Ridge
The main advantage of trading using opposite Truist Financial and Blue Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Blue Ridge 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 Blue Ridge will offset losses from the drop in Blue Ridge's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock | Truist Financial vs. US Bancorp |
| Blue Ridge vs. LINKBANCORP | Blue Ridge vs. Colony Bankcorp | Blue Ridge vs. Bankwell Financial Group | Blue Ridge vs. ECB 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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