Correlation Between Truist Financial and National Bankshares
Can any of the company-specific risk be diversified away by investing in both Truist Financial and National Bankshares 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 National Bankshares 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 National Bankshares, you can compare the effects of market volatilities on Truist Financial and National Bankshares 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 National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and National Bankshares.
Diversification Opportunities for Truist Financial and National Bankshares
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Truist and National is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 National Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bankshares has no effect on the direction of Truist Financial i.e., Truist Financial and National Bankshares go up and down completely randomly.
Pair Corralation between Truist Financial and National Bankshares
Considering the 90-day investment horizon Truist Financial Corp is expected to generate 1.14 times more return on investment than National Bankshares. However, Truist Financial is 1.14 times more volatile than National Bankshares. It trades about 0.21 of its potential returns per unit of risk. National Bankshares is currently generating about 0.14 per unit of risk. If you would invest 4,261 in Truist Financial Corp on August 30, 2024 and sell it today you would earn a total of 514.00 from holding Truist Financial Corp or generate 12.06% 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. National Bankshares
Performance |
| Timeline |
| Truist Financial Corp |
| National Bankshares |
Truist Financial and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and National Bankshares
The main advantage of trading using opposite Truist Financial and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, National Bankshares 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 National Bankshares will offset losses from the drop in National Bankshares' long position.| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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