Correlation Between Truist Financial and Valley National
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Valley National 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 Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Valley National Bancorp, you can compare the effects of market volatilities on Truist Financial and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Valley National.
Diversification Opportunities for Truist Financial and Valley National
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Valley is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Valley National go up and down completely randomly.
Pair Corralation between Truist Financial and Valley National
Assuming the 90 days trading horizon Truist Financial is expected to generate 6.37 times less return on investment than Valley National. In addition to that, Truist Financial is 1.25 times more volatile than Valley National Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Valley National Bancorp is currently generating about 0.13 per unit of volatility. If you would invest 2,220 in Valley National Bancorp on November 4, 2024 and sell it today you would earn a total of 292.00 from holding Valley National Bancorp or generate 13.15% 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. Valley National Bancorp
Performance |
| Timeline |
| Truist Financial |
| Valley National Bancorp |
Truist Financial and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Valley National
The main advantage of trading using opposite Truist Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.| Truist Financial vs. Axos Financial | Truist Financial vs. Byline Bancorp | Truist Financial vs. Deutsche Bank AG | Truist Financial vs. KB Financial Group |
| Valley National vs. Valley National Bancorp | Valley National vs. Washington Federal | Valley National vs. US Bancorp PERP | Valley National vs. US 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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