Correlation Between Truist Financial and CRISPR Therapeutics

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

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

Diversification Opportunities for Truist Financial and CRISPR Therapeutics

0.69

Correlation Coefficient

Truist Financial  CRISPR Therapeutics

Poor diversification

The 3 months correlation between Truist and CRISPR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics 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 CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Truist Financial i.e., Truist Financial and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Truist Financial and CRISPR Therapeutics

Assuming the 90 days trading horizon Truist Financial is expected to generate 0.68 times more return on investment than CRISPR Therapeutics. However, Truist Financial is 1.46 times less risky than CRISPR Therapeutics. It trades about 0.03 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about 0.02 per unit of risk. If you would invest  21,874  in Truist Financial on October 11, 2024 and sell it today you would earn a total of  4,832  from holding Truist Financial or generate 22.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.37%
Values	Daily Returns

Truist Financial  vs.  CRISPR Therapeutics AG

Truist Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CRISPR Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Truist Financial and CRISPR Therapeutics

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

The idea behind Truist Financial and CRISPR Therapeutics AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.