Correlation Between Truist Financial and Carter Bank
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Carter 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 Carter Bank 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 Carter Bank and, you can compare the effects of market volatilities on Truist Financial and Carter 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 Carter Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Carter Bank.
Diversification Opportunities for Truist Financial and Carter Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Truist and Carter is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Carter Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carter Bank 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 Carter Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carter Bank has no effect on the direction of Truist Financial i.e., Truist Financial and Carter Bank go up and down completely randomly.
Pair Corralation between Truist Financial and Carter Bank
Considering the 90-day investment horizon Truist Financial Corp is expected to generate 1.04 times more return on investment than Carter Bank. However, Truist Financial is 1.04 times more volatile than Carter Bank and. It trades about 0.03 of its potential returns per unit of risk. Carter Bank and is currently generating about 0.01 per unit of risk. If you would invest 3,751 in Truist Financial Corp on August 30, 2024 and sell it today you would earn a total of 1,024 from holding Truist Financial Corp or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial Corp vs. Carter Bank and
Performance |
| Timeline |
| Truist Financial Corp |
| Carter Bank |
Truist Financial and Carter Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Carter Bank
The main advantage of trading using opposite Truist Financial and Carter Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Carter 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 Carter Bank will offset losses from the drop in Carter Bank's long position.| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
| Carter Bank vs. Home Bancorp | Carter Bank vs. Community West Bancshares | Carter Bank vs. First Community | Carter Bank vs. Great Southern 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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