Correlation Between Truist Financial and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Truist Financial and BBVA Banco 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 BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and BBVA Banco Frances, you can compare the effects of market volatilities on Truist Financial and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and BBVA Banco.
Diversification Opportunities for Truist Financial and BBVA Banco
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and BBVA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Truist Financial i.e., Truist Financial and BBVA Banco go up and down completely randomly.
Pair Corralation between Truist Financial and BBVA Banco
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the BBVA Banco. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 3.03 times less risky than BBVA Banco. The preferred stock trades about -0.04 of its potential returns per unit of risk. The BBVA Banco Frances is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,381 in BBVA Banco Frances on August 27, 2024 and sell it today you would earn a total of 269.00 from holding BBVA Banco Frances or generate 19.48% 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. BBVA Banco Frances
Performance |
| Timeline |
| Truist Financial |
| BBVA Banco Frances |
Truist Financial and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and BBVA Banco
The main advantage of trading using opposite Truist Financial and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
| BBVA Banco vs. Banco Macro SA | BBVA Banco vs. Grupo Financiero Galicia | BBVA Banco vs. Banco Bradesco SA | BBVA Banco vs. Itau Unibanco Banco |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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