Correlation Between TrustCo Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both TrustCo Bank and Dow Jones 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 TrustCo Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TrustCo Bank Corp and Dow Jones Industrial, you can compare the effects of market volatilities on TrustCo Bank and Dow Jones 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 TrustCo Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrustCo Bank and Dow Jones.
Diversification Opportunities for TrustCo Bank and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TrustCo and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TrustCo Bank Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and TrustCo Bank 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 TrustCo Bank Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of TrustCo Bank i.e., TrustCo Bank and Dow Jones go up and down completely randomly.
Pair Corralation between TrustCo Bank and Dow Jones
Given the investment horizon of 90 days TrustCo Bank Corp is expected to generate 3.4 times more return on investment than Dow Jones. However, TrustCo Bank is 3.4 times more volatile than Dow Jones Industrial. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 3,298 in TrustCo Bank Corp on September 1, 2024 and sell it today you would earn a total of 426.00 from holding TrustCo Bank Corp or generate 12.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TrustCo Bank Corp vs. Dow Jones Industrial
Performance |
| Timeline |
TrustCo Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
TrustCo Bank Corp
Pair trading matchups for TrustCo Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with TrustCo Bank and Dow Jones
The main advantage of trading using opposite TrustCo Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrustCo Bank position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| TrustCo Bank vs. Southern Missouri Bancorp | TrustCo Bank vs. IF Bancorp | TrustCo Bank vs. Colony Bankcorp | TrustCo Bank vs. Old Point Financial |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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