Correlation Between Truist Financial and Midland States
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Midland States 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 Midland States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Midland States Bancorp, you can compare the effects of market volatilities on Truist Financial and Midland States 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 Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Midland States.
Diversification Opportunities for Truist Financial and Midland States
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Midland is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States 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 Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Midland States go up and down completely randomly.
Pair Corralation between Truist Financial and Midland States
Assuming the 90 days trading horizon Truist Financial is expected to generate 1.59 times less return on investment than Midland States. But when comparing it to its historical volatility, Truist Financial is 1.42 times less risky than Midland States. It trades about 0.02 of its potential returns per unit of risk. Midland States Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,228 in Midland States Bancorp on November 1, 2024 and sell it today you would earn a total of 192.00 from holding Midland States Bancorp or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Truist Financial vs. Midland States Bancorp
Performance |
| Timeline |
| Truist Financial |
| Midland States Bancorp |
Truist Financial and Midland States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Midland States
The main advantage of trading using opposite Truist Financial and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.| Truist Financial vs. Axos Financial | Truist Financial vs. Byline Bancorp | Truist Financial vs. Deutsche Bank AG | Truist Financial vs. KB Financial Group |
| Midland States vs. Texas Capital Bancshares | Midland States vs. Merchants Bancorp | Midland States vs. Wintrust Financial Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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