Correlation Between Triumph Financial and BFC Capital
Can any of the company-specific risk be diversified away by investing in both Triumph Financial and BFC Capital 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 Triumph Financial and BFC Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Financial and BFC Capital Trust, you can compare the effects of market volatilities on Triumph Financial and BFC Capital 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 Triumph Financial with a short position of BFC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph Financial and BFC Capital.
Diversification Opportunities for Triumph Financial and BFC Capital
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Triumph and BFC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Financial and BFC Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFC Capital Trust and Triumph 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 Triumph Financial are associated (or correlated) with BFC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFC Capital Trust has no effect on the direction of Triumph Financial i.e., Triumph Financial and BFC Capital go up and down completely randomly.
Pair Corralation between Triumph Financial and BFC Capital
Assuming the 90 days horizon Triumph Financial is expected to generate 2.55 times more return on investment than BFC Capital. However, Triumph Financial is 2.55 times more volatile than BFC Capital Trust. It trades about 0.06 of its potential returns per unit of risk. BFC Capital Trust is currently generating about -0.02 per unit of risk. If you would invest 2,338 in Triumph Financial on August 28, 2024 and sell it today you would earn a total of 37.00 from holding Triumph Financial or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Financial vs. BFC Capital Trust
Performance |
| Timeline |
| Triumph Financial |
| BFC Capital Trust |
Triumph Financial and BFC Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph Financial and BFC Capital
The main advantage of trading using opposite Triumph Financial and BFC Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph Financial position performs unexpectedly, BFC Capital 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 BFC Capital will offset losses from the drop in BFC Capital's long position.| Triumph Financial vs. Triumph Financial | Triumph Financial vs. Wintrust Financial Corp | Triumph Financial vs. First Merchants | Triumph Financial vs. Pinnacle Financial Partners |
| BFC Capital vs. Popular Capital Trust | BFC Capital vs. CHS Inc CN | BFC Capital vs. Wintrust Financial Corp | BFC Capital vs. Auburn National 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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