Correlation Between Truist Financial and First Republic
Can any of the company-specific risk be diversified away by investing in both Truist Financial and First Republic 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 First Republic 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 First Republic Bank, you can compare the effects of market volatilities on Truist Financial and First Republic 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 First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and First Republic.
Diversification Opportunities for Truist Financial and First Republic
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and First is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic 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 First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Truist Financial i.e., Truist Financial and First Republic go up and down completely randomly.
Pair Corralation between Truist Financial and First Republic
Considering the 90-day investment horizon Truist Financial Corp is expected to generate 0.12 times more return on investment than First Republic. However, Truist Financial Corp is 8.28 times less risky than First Republic. It trades about 0.02 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.14 per unit of risk. If you would invest 4,424 in Truist Financial Corp on November 2, 2024 and sell it today you would earn a total of 338.00 from holding Truist Financial Corp or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 22.27% |
| Values | Daily Returns |
Truist Financial Corp vs. First Republic Bank
Performance |
| Timeline |
| Truist Financial Corp |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Truist Financial and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and First Republic
The main advantage of trading using opposite Truist Financial and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, First Republic 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 First Republic will offset losses from the drop in First Republic's long position.| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
| First Republic vs. Toro | First Republic vs. MYT Netherlands Parent | First Republic vs. Bill Com Holdings | First Republic vs. TFI International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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