Correlation Between Truist Financial and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Metropolitan 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 Metropolitan 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 Metropolitan Bank Holding, you can compare the effects of market volatilities on Truist Financial and Metropolitan 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Metropolitan Bank.
Diversification Opportunities for Truist Financial and Metropolitan Bank
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and Metropolitan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of Truist Financial i.e., Truist Financial and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Truist Financial and Metropolitan Bank
Assuming the 90 days trading horizon Truist Financial is expected to generate 16.58 times less return on investment than Metropolitan Bank. But when comparing it to its historical volatility, Truist Financial is 3.63 times less risky than Metropolitan Bank. It trades about 0.02 of its potential returns per unit of risk. Metropolitan Bank Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,921 in Metropolitan Bank Holding on August 27, 2024 and sell it today you would earn a total of 2,731 from holding Metropolitan Bank Holding or generate 69.65% 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. Metropolitan Bank Holding
Performance |
| Timeline |
| Truist Financial |
| Metropolitan Bank Holding |
Truist Financial and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Metropolitan Bank
The main advantage of trading using opposite Truist Financial and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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