Correlation Between Apollo Bancorp and Truist Financial

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

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

Diversification Opportunities for Apollo Bancorp and Truist Financial

0.58

Correlation Coefficient

Apollo Bancorp  Truist Financial

Very weak diversification

The 3 months correlation between Apollo and Truist is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp 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 Apollo Bancorp 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 Apollo Bancorp 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 Apollo Bancorp i.e., Apollo Bancorp and Truist Financial go up and down completely randomly.

Pair Corralation between Apollo Bancorp and Truist Financial

Given the investment horizon of 90 days Apollo Bancorp is expected to generate 1.33 times more return on investment than Truist Financial. However, Apollo Bancorp is 1.33 times more volatile than Truist Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Truist Financial Corp is currently generating about 0.01 per unit of risk. If you would invest  3,675  in Apollo Bancorp on December 2, 2024 and sell it today you would earn a total of  325.00  from holding Apollo Bancorp or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

Apollo Bancorp  vs.  Truist Financial Corp

Apollo Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Apollo Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Truist Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Truist Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Truist Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apollo Bancorp and Truist Financial

The main advantage of trading using opposite Apollo Bancorp and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Bancorp 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 Apollo Bancorp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.