Correlation Between Truist Financial and Atlanticus Holdings

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

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

Diversification Opportunities for Truist Financial and Atlanticus Holdings

0.52

Correlation Coefficient

Truist Financial  Atlanticus Holdings

Very weak diversification

The 3 months correlation between Truist and Atlanticus is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Atlanticus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings 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 Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings has no effect on the direction of Truist Financial i.e., Truist Financial and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Truist Financial and Atlanticus Holdings

Assuming the 90 days trading horizon Truist Financial is expected to generate 4.05 times less return on investment than Atlanticus Holdings. But when comparing it to its historical volatility, Truist Financial is 1.04 times less risky than Atlanticus Holdings. It trades about 0.03 of its potential returns per unit of risk. Atlanticus Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,163  in Atlanticus Holdings on September 29, 2024 and sell it today you would earn a total of  202.00  from holding Atlanticus Holdings or generate 9.34% return on investment over 90 days.

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

Truist Financial  vs.  Atlanticus Holdings

Truist Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Truist Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Atlanticus Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Atlanticus Holdings is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Truist Financial and Atlanticus Holdings

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

The idea behind Truist Financial and Atlanticus Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.