Correlation Between Truist Financial and Bank of the
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Bank of the 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 Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Bank of the, you can compare the effects of market volatilities on Truist Financial and Bank of the 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 Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Bank of the.
Diversification Opportunities for Truist Financial and Bank of the
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Bank is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the 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 Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of Truist Financial i.e., Truist Financial and Bank of the go up and down completely randomly.
Pair Corralation between Truist Financial and Bank of the
Assuming the 90 days trading horizon Truist Financial is expected to generate 0.25 times more return on investment than Bank of the. However, Truist Financial is 3.96 times less risky than Bank of the. It trades about 0.05 of its potential returns per unit of risk. Bank of the is currently generating about -0.06 per unit of risk. If you would invest 2,034 in Truist Financial on November 5, 2024 and sell it today you would earn a total of 21.00 from holding Truist Financial or generate 1.03% 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. Bank of the
Performance |
| Timeline |
| Truist Financial |
| Bank of the |
Truist Financial and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Bank of the
The main advantage of trading using opposite Truist Financial and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the'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 |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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