Correlation Between Truist Financial and POSBO UNSPADRS20YC1

Can any of the company-specific risk be diversified away by investing in both Truist Financial and POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Truist Financial and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on Truist Financial and POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and POSBO UNSPADRS20YC1.

Diversification Opportunities for Truist Financial and POSBO UNSPADRS20YC1

-0.15

Correlation Coefficient

Truist Financial  POSBO UNSPADRS20YC1

Good diversification

The 3 months correlation between Truist and POSBO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS20YC1 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 are associated (or correlated) with POSBO UNSPADRS20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS20YC1 has no effect on the direction of Truist Financial i.e., Truist Financial and POSBO UNSPADRS20YC1 go up and down completely randomly.

Pair Corralation between Truist Financial and POSBO UNSPADRS20YC1

Assuming the 90 days horizon Truist Financial is expected to generate 1.39 times less return on investment than POSBO UNSPADRS20YC1. But when comparing it to its historical volatility, Truist Financial is 1.2 times less risky than POSBO UNSPADRS20YC1. It trades about 0.08 of its potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  955.00  in POSBO UNSPADRS20YC1 on September 23, 2024 and sell it today you would earn a total of  125.00  from holding POSBO UNSPADRS20YC1 or generate 13.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Truist Financial  vs.  POSBO UNSPADRS20YC1

Truist Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

POSBO UNSPADRS20YC1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, POSBO UNSPADRS20YC1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and POSBO UNSPADRS20YC1

The main advantage of trading using opposite Truist Financial and POSBO UNSPADRS20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, POSBO UNSPADRS20YC1 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 POSBO UNSPADRS20YC1 will offset losses from the drop in POSBO UNSPADRS20YC1's long position.

The idea behind Truist Financial and POSBO UNSPADRS20YC1 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.