Correlation Between Truist Financial and Bancolombia
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Bancolombia 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 Bancolombia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Bancolombia SA ADR, you can compare the effects of market volatilities on Truist Financial and Bancolombia 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 Bancolombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Bancolombia.
Diversification Opportunities for Truist Financial and Bancolombia
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Bancolombia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR 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 Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of Truist Financial i.e., Truist Financial and Bancolombia go up and down completely randomly.
Pair Corralation between Truist Financial and Bancolombia
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Bancolombia. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 1.93 times less risky than Bancolombia. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Bancolombia SA ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,105 in Bancolombia SA ADR on August 24, 2024 and sell it today you would earn a total of 171.00 from holding Bancolombia SA ADR or generate 5.51% 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. Bancolombia SA ADR
Performance |
| Timeline |
| Truist Financial |
| Bancolombia SA ADR |
Truist Financial and Bancolombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Bancolombia
The main advantage of trading using opposite Truist Financial and Bancolombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Bancolombia 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 Bancolombia will offset losses from the drop in Bancolombia's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock |
| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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