Correlation Between FIRST SAVINGS and Truist Financial

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

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

Diversification Opportunities for FIRST SAVINGS and Truist Financial

0.93

Correlation Coefficient

FIRST SAVINGS  Truist Financial

Almost no diversification

The 3 months correlation between FIRST and Truist is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and FIRST SAVINGS 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 FIRST SAVINGS FINL 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 FIRST SAVINGS i.e., FIRST SAVINGS and Truist Financial go up and down completely randomly.

Pair Corralation between FIRST SAVINGS and Truist Financial

Assuming the 90 days horizon FIRST SAVINGS FINL is expected to under-perform the Truist Financial. In addition to that, FIRST SAVINGS is 2.03 times more volatile than Truist Financial. It trades about -0.2 of its total potential returns per unit of risk. Truist Financial is currently generating about -0.15 per unit of volatility. If you would invest  4,429  in Truist Financial on October 9, 2024 and sell it today you would lose (186.00) from holding Truist Financial or give up 4.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.12%
Values	Daily Returns

FIRST SAVINGS FINL  vs.  Truist Financial

FIRST SAVINGS FINL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SAVINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Truist Financial

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with FIRST SAVINGS and Truist Financial

The main advantage of trading using opposite FIRST SAVINGS and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SAVINGS 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 FIRST SAVINGS FINL and Truist Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.