Correlation Between Truist Financial and OptimumBank Holdings
Can any of the company-specific risk be diversified away by investing in both Truist Financial and OptimumBank Holdings 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 OptimumBank Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and OptimumBank Holdings, you can compare the effects of market volatilities on Truist Financial and OptimumBank Holdings 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 OptimumBank Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and OptimumBank Holdings.
Diversification Opportunities for Truist Financial and OptimumBank Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and OptimumBank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and OptimumBank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptimumBank Holdings 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 OptimumBank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptimumBank Holdings has no effect on the direction of Truist Financial i.e., Truist Financial and OptimumBank Holdings go up and down completely randomly.
Pair Corralation between Truist Financial and OptimumBank Holdings
Assuming the 90 days trading horizon Truist Financial is expected to generate 2.93 times less return on investment than OptimumBank Holdings. But when comparing it to its historical volatility, Truist Financial is 2.24 times less risky than OptimumBank Holdings. It trades about 0.05 of its potential returns per unit of risk. OptimumBank Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 383.00 in OptimumBank Holdings on September 12, 2024 and sell it today you would earn a total of 109.00 from holding OptimumBank Holdings or generate 28.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. OptimumBank Holdings
Performance |
| Timeline |
| Truist Financial |
| OptimumBank Holdings |
Truist Financial and OptimumBank Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and OptimumBank Holdings
The main advantage of trading using opposite Truist Financial and OptimumBank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, OptimumBank Holdings 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 OptimumBank Holdings will offset losses from the drop in OptimumBank Holdings' long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
| OptimumBank Holdings vs. First National Bank | OptimumBank Holdings vs. TrustCo Bank Corp | OptimumBank Holdings vs. Inter Co Class | OptimumBank Holdings vs. Rhinebeck 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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