Correlation Between Truist Financial and Popular
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Popular 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 Popular into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial Corp and Popular, you can compare the effects of market volatilities on Truist Financial and Popular 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 Popular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Popular.
Diversification Opportunities for Truist Financial and Popular
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Truist and Popular is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular 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 Corp are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of Truist Financial i.e., Truist Financial and Popular go up and down completely randomly.
Pair Corralation between Truist Financial and Popular
Considering the 90-day investment horizon Truist Financial is expected to generate 1.83 times less return on investment than Popular. In addition to that, Truist Financial is 1.14 times more volatile than Popular. It trades about 0.03 of its total potential returns per unit of risk. Popular is currently generating about 0.06 per unit of volatility. If you would invest 6,137 in Popular on September 13, 2024 and sell it today you would earn a total of 3,670 from holding Popular or generate 59.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial Corp vs. Popular
Performance |
| Timeline |
| Truist Financial Corp |
| Popular |
Truist Financial and Popular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Popular
The main advantage of trading using opposite Truist Financial and Popular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Popular 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 Popular will offset losses from the drop in Popular's long position.| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
| Popular vs. Comerica | Popular vs. Truist Financial Corp | Popular vs. Fifth Third Bancorp | Popular vs. Zions Bancorporation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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