Correlation Between Truist Financial and WesBanco

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

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

Diversification Opportunities for Truist Financial and WesBanco

-0.72

Correlation Coefficient

Truist Financial  WesBanco

Pay attention - limited upside

The 3 months correlation between Truist and WesBanco is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Truist Financial i.e., Truist Financial and WesBanco go up and down completely randomly.

Pair Corralation between Truist Financial and WesBanco

Assuming the 90 days trading horizon Truist Financial is expected to under-perform the WesBanco. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 2.68 times less risky than WesBanco. The preferred stock trades about -0.16 of its potential returns per unit of risk. The WesBanco is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,072  in WesBanco on September 14, 2024 and sell it today you would earn a total of  442.00  from holding WesBanco or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Truist Financial  vs.  WesBanco

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. In spite of latest weak performance, the Preferred Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

WesBanco

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, WesBanco exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and WesBanco

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

The idea behind Truist Financial and WesBanco 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.