Correlation Between Triumph Financial and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both Triumph Financial and ECB Bancorp 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 ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Financial and ECB Bancorp, you can compare the effects of market volatilities on Triumph Financial and ECB Bancorp 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 ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph Financial and ECB Bancorp.
Diversification Opportunities for Triumph Financial and ECB Bancorp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Triumph and ECB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Financial and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of Triumph Financial i.e., Triumph Financial and ECB Bancorp go up and down completely randomly.
Pair Corralation between Triumph Financial and ECB Bancorp
Assuming the 90 days horizon Triumph Financial is expected to generate 1.19 times more return on investment than ECB Bancorp. However, Triumph Financial is 1.19 times more volatile than ECB Bancorp. It trades about -0.01 of its potential returns per unit of risk. ECB Bancorp is currently generating about -0.02 per unit of risk. If you would invest 2,338 in Triumph Financial on August 27, 2024 and sell it today you would lose (8.00) from holding Triumph Financial or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Financial vs. ECB Bancorp
Performance |
| Timeline |
| Triumph Financial |
| ECB Bancorp |
Triumph Financial and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph Financial and ECB Bancorp
The main advantage of trading using opposite Triumph Financial and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph Financial position performs unexpectedly, ECB Bancorp 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 ECB Bancorp will offset losses from the drop in ECB Bancorp'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 |
| ECB Bancorp vs. Fifth Third Bancorp | ECB Bancorp vs. Zions Bancorporation | ECB Bancorp vs. Huntington Bancshares Incorporated | ECB Bancorp vs. PNC Financial Services |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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