Correlation Between Truist Financial and VersaBank
Can any of the company-specific risk be diversified away by investing in both Truist Financial and VersaBank 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 VersaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and VersaBank, you can compare the effects of market volatilities on Truist Financial and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and VersaBank.
Diversification Opportunities for Truist Financial and VersaBank
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and VersaBank is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Truist Financial i.e., Truist Financial and VersaBank go up and down completely randomly.
Pair Corralation between Truist Financial and VersaBank
Assuming the 90 days trading horizon Truist Financial is expected to generate 15.6 times less return on investment than VersaBank. But when comparing it to its historical volatility, Truist Financial is 2.43 times less risky than VersaBank. It trades about 0.02 of its potential returns per unit of risk. VersaBank is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,123 in VersaBank on August 28, 2024 and sell it today you would earn a total of 636.00 from holding VersaBank or generate 56.63% 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. VersaBank
Performance |
| Timeline |
| Truist Financial |
| VersaBank |
Truist Financial and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and VersaBank
The main advantage of trading using opposite Truist Financial and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's long position.| Truist Financial vs. Morgan Stanley | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp | Truist Financial vs. KeyCorp |
| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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