Correlation Between Truist Financial and United Bancorp
Can any of the company-specific risk be diversified away by investing in both Truist Financial and United Bancorp 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 United Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and United Bancorp, you can compare the effects of market volatilities on Truist Financial and United Bancorp 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 United Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and United Bancorp.
Diversification Opportunities for Truist Financial and United Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truist and United is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and United Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and United Bancorp go up and down completely randomly.
Pair Corralation between Truist Financial and United Bancorp
Assuming the 90 days trading horizon Truist Financial is expected to generate 0.47 times more return on investment than United Bancorp. However, Truist Financial is 2.12 times less risky than United Bancorp. It trades about -0.05 of its potential returns per unit of risk. United Bancorp is currently generating about -0.11 per unit of risk. If you would invest 1,986 in Truist Financial on October 14, 2024 and sell it today you would lose (30.00) from holding Truist Financial or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. United Bancorp
Performance |
| Timeline |
| Truist Financial |
| United Bancorp |
Truist Financial and United Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and United Bancorp
The main advantage of trading using opposite Truist Financial and United Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, United Bancorp 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 United Bancorp will offset losses from the drop in United Bancorp's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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