Correlation Between Truist Financial and Capital Bancorp
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Capital Bancorp 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 Capital Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Capital Bancorp, you can compare the effects of market volatilities on Truist Financial and Capital Bancorp 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 Capital Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Capital Bancorp.
Diversification Opportunities for Truist Financial and Capital Bancorp
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Capital is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Capital Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital 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 Capital Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Capital Bancorp go up and down completely randomly.
Pair Corralation between Truist Financial and Capital Bancorp
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Capital Bancorp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 2.78 times less risky than Capital Bancorp. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Capital Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,502 in Capital Bancorp on August 30, 2024 and sell it today you would earn a total of 356.00 from holding Capital Bancorp or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Truist Financial vs. Capital Bancorp
Performance |
| Timeline |
| Truist Financial |
| Capital Bancorp |
Truist Financial and Capital Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Capital Bancorp
The main advantage of trading using opposite Truist Financial and Capital Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Capital Bancorp 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 Capital Bancorp will offset losses from the drop in Capital Bancorp's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
| Capital Bancorp vs. Community West Bancshares | Capital Bancorp vs. First Northwest Bancorp | Capital Bancorp vs. Home Federal Bancorp | Capital Bancorp vs. First Business Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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