Correlation Between Western New and Truist Financial
Can any of the company-specific risk be diversified away by investing in both Western New and Truist Financial 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 Western New and Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western New England and Truist Financial, you can compare the effects of market volatilities on Western New and Truist Financial 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 Western New with a short position of Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western New and Truist Financial.
Diversification Opportunities for Western New and Truist Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Truist is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Western New England and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and Western New 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 Western New England are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of Western New i.e., Western New and Truist Financial go up and down completely randomly.
Pair Corralation between Western New and Truist Financial
Given the investment horizon of 90 days Western New England is expected to generate 1.27 times more return on investment than Truist Financial. However, Western New is 1.27 times more volatile than Truist Financial. It trades about 0.26 of its potential returns per unit of risk. Truist Financial is currently generating about -0.08 per unit of risk. If you would invest 862.00 in Western New England on August 30, 2024 and sell it today you would earn a total of 75.00 from holding Western New England or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western New England vs. Truist Financial
Performance |
| Timeline |
| Western New England |
| Truist Financial |
Western New and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western New and Truist Financial
The main advantage of trading using opposite Western New and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western New position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.| Western New vs. IF Bancorp | Western New vs. Shore Bancshares | Western New vs. Colony Bankcorp | Western New vs. Investar Holding Corp |
| Truist Financial vs. Truist Financial | Truist Financial vs. Truist Financial | Truist Financial vs. US Bancorp | Truist Financial vs. MetLife Preferred Stock |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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