Correlation Between Truist Financial and First Business
Can any of the company-specific risk be diversified away by investing in both Truist Financial and First Business 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 First Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and First Business Financial, you can compare the effects of market volatilities on Truist Financial and First Business 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 First Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and First Business.
Diversification Opportunities for Truist Financial and First Business
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and First is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and First Business Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Business Financial 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 First Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Business Financial has no effect on the direction of Truist Financial i.e., Truist Financial and First Business go up and down completely randomly.
Pair Corralation between Truist Financial and First Business
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the First Business. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 3.01 times less risky than First Business. The preferred stock trades about -0.07 of its potential returns per unit of risk. The First Business Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,456 in First Business Financial on August 27, 2024 and sell it today you would earn a total of 592.00 from holding First Business Financial or generate 13.29% 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. First Business Financial
Performance |
| Timeline |
| Truist Financial |
| First Business Financial |
Truist Financial and First Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and First Business
The main advantage of trading using opposite Truist Financial and First Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, First Business 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 First Business will offset losses from the drop in First Business' long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| First Business vs. Fifth Third Bancorp | First Business vs. Zions Bancorporation | First Business vs. Huntington Bancshares Incorporated | First Business vs. PNC Financial Services |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |