Correlation Between Truist Financial and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Investar Holding 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 Investar Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Investar Holding Corp, you can compare the effects of market volatilities on Truist Financial and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Investar Holding.
Diversification Opportunities for Truist Financial and Investar Holding
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Investar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Truist Financial i.e., Truist Financial and Investar Holding go up and down completely randomly.
Pair Corralation between Truist Financial and Investar Holding
Assuming the 90 days trading horizon Truist Financial is expected to generate 1.44 times less return on investment than Investar Holding. But when comparing it to its historical volatility, Truist Financial is 1.9 times less risky than Investar Holding. It trades about 0.03 of its potential returns per unit of risk. Investar Holding Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,044 in Investar Holding Corp on August 24, 2024 and sell it today you would earn a total of 295.00 from holding Investar Holding Corp or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Investar Holding Corp
Performance |
| Timeline |
| Truist Financial |
| Investar Holding Corp |
Truist Financial and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Investar Holding
The main advantage of trading using opposite Truist Financial and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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