Correlation Between Tennessee Valley and Truist Financial

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

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

Diversification Opportunities for Tennessee Valley and Truist Financial

-0.31

Correlation Coefficient

Tennessee Valley  Truist Financial

Very good diversification

The 3 months correlation between Tennessee and Truist is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tennessee Valley Financial and Truist Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial Corp and Tennessee Valley 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 Tennessee Valley Financial 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 Corp has no effect on the direction of Tennessee Valley i.e., Tennessee Valley and Truist Financial go up and down completely randomly.

Pair Corralation between Tennessee Valley and Truist Financial

Given the investment horizon of 90 days Tennessee Valley is expected to generate 1.4 times less return on investment than Truist Financial. In addition to that, Tennessee Valley is 1.01 times more volatile than Truist Financial Corp. It trades about 0.05 of its total potential returns per unit of risk. Truist Financial Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,245  in Truist Financial Corp on September 19, 2024 and sell it today you would earn a total of  290.50  from holding Truist Financial Corp or generate 6.84% return on investment over 90 days.

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

Tennessee Valley Financial  vs.  Truist Financial Corp

Tennessee Valley Fin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tennessee Valley Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Tennessee Valley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Truist Financial Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tennessee Valley and Truist Financial

The main advantage of trading using opposite Tennessee Valley and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tennessee Valley 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.

The idea behind Tennessee Valley Financial and Truist Financial Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.