Correlation Between Truist Financial and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Cadence Bank 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 Cadence Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Cadence Bank, you can compare the effects of market volatilities on Truist Financial and Cadence Bank 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 Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Cadence Bank.
Diversification Opportunities for Truist Financial and Cadence Bank
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Truist and Cadence is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Truist Financial i.e., Truist Financial and Cadence Bank go up and down completely randomly.
Pair Corralation between Truist Financial and Cadence Bank
Assuming the 90 days trading horizon Truist Financial is expected to generate 1.05 times more return on investment than Cadence Bank. However, Truist Financial is 1.05 times more volatile than Cadence Bank. It trades about 0.04 of its potential returns per unit of risk. Cadence Bank is currently generating about 0.01 per unit of risk. If you would invest 1,984 in Truist Financial on August 29, 2024 and sell it today you would earn a total of 71.00 from holding Truist Financial or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Cadence Bank
Performance |
| Timeline |
| Truist Financial |
| Cadence Bank |
Truist Financial and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Cadence Bank
The main advantage of trading using opposite Truist Financial and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Cadence Bank 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 Cadence Bank will offset losses from the drop in Cadence Bank's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock | Truist Financial vs. US Bancorp |
| Cadence Bank vs. Bank of Hawaii | Cadence Bank vs. Associated Banc Corp | Cadence Bank vs. Citizens Financial Group | Cadence Bank vs. CullenFrost Bankers |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |