Correlation Between Truist Financial and Community Trust
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Community Trust 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 Community Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Community Trust Bancorp, you can compare the effects of market volatilities on Truist Financial and Community Trust 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 Community Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Community Trust.
Diversification Opportunities for Truist Financial and Community Trust
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Community is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Community Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Trust 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 Community Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Trust Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Community Trust go up and down completely randomly.
Pair Corralation between Truist Financial and Community Trust
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Community Trust. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 3.45 times less risky than Community Trust. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Community Trust Bancorp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,273 in Community Trust Bancorp on August 31, 2024 and sell it today you would earn a total of 620.00 from holding Community Trust Bancorp or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Truist Financial vs. Community Trust Bancorp
Performance |
| Timeline |
| Truist Financial |
| Community Trust Bancorp |
Truist Financial and Community Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Community Trust
The main advantage of trading using opposite Truist Financial and Community Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Community Trust 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 Community Trust will offset losses from the drop in Community Trust's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust Bancshares |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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