Correlation Between Truist Financial and UNICREDIT SPA

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

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

Diversification Opportunities for Truist Financial and UNICREDIT SPA

-0.12

Correlation Coefficient

Truist Financial  UNICREDIT SPA

Good diversification

The 3 months correlation between Truist and UNICREDIT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and UNICREDIT SPA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICREDIT SPA ADR 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 UNICREDIT SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNICREDIT SPA ADR has no effect on the direction of Truist Financial i.e., Truist Financial and UNICREDIT SPA go up and down completely randomly.

Pair Corralation between Truist Financial and UNICREDIT SPA

Assuming the 90 days horizon Truist Financial is expected to generate 5.02 times less return on investment than UNICREDIT SPA. In addition to that, Truist Financial is 1.04 times more volatile than UNICREDIT SPA ADR. It trades about 0.02 of its total potential returns per unit of risk. UNICREDIT SPA ADR is currently generating about 0.12 per unit of volatility. If you would invest  572.00  in UNICREDIT SPA ADR on September 23, 2024 and sell it today you would earn a total of  1,278  from holding UNICREDIT SPA ADR or generate 223.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Truist Financial  vs.  UNICREDIT SPA ADR

Truist Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UNICREDIT SPA ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, UNICREDIT SPA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Truist Financial and UNICREDIT SPA

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

The idea behind Truist Financial and UNICREDIT SPA ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.