Correlation Between Truist Financial and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Merchants Bancorp 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 Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Merchants Bancorp, you can compare the effects of market volatilities on Truist Financial and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Merchants Bancorp.
Diversification Opportunities for Truist Financial and Merchants Bancorp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Merchants is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Truist Financial and Merchants Bancorp
Assuming the 90 days trading horizon Truist Financial is expected to generate 2.62 times less return on investment than Merchants Bancorp. In addition to that, Truist Financial is 1.22 times more volatile than Merchants Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Merchants Bancorp is currently generating about 0.07 per unit of volatility. If you would invest 2,293 in Merchants Bancorp on November 9, 2024 and sell it today you would earn a total of 317.00 from holding Merchants Bancorp or generate 13.82% 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. Merchants Bancorp
Performance |
| Timeline |
| Truist Financial |
| Merchants Bancorp |
Truist Financial and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Merchants Bancorp
The main advantage of trading using opposite Truist Financial and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |