Correlation Between Truist Financial and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both Truist Financial and First Commonwealth 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 First Commonwealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and First Commonwealth Financial, you can compare the effects of market volatilities on Truist Financial and First Commonwealth 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 First Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and First Commonwealth.
Diversification Opportunities for Truist Financial and First Commonwealth
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and First is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Truist Financial i.e., Truist Financial and First Commonwealth go up and down completely randomly.
Pair Corralation between Truist Financial and First Commonwealth
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the First Commonwealth. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 4.14 times less risky than First Commonwealth. The preferred stock trades about -0.06 of its potential returns per unit of risk. The First Commonwealth Financial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,697 in First Commonwealth Financial on August 27, 2024 and sell it today you would earn a total of 224.00 from holding First Commonwealth Financial or generate 13.2% 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. First Commonwealth Financial
Performance |
| Timeline |
| Truist Financial |
| First Commonwealth |
Truist Financial and First Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and First Commonwealth
The main advantage of trading using opposite Truist Financial and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, First Commonwealth 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 First Commonwealth will offset losses from the drop in First Commonwealth's long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| First Commonwealth vs. Fifth Third Bancorp | First Commonwealth vs. Zions Bancorporation | First Commonwealth vs. Huntington Bancshares Incorporated | First Commonwealth vs. PNC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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