Correlation Between Truist Financial and Sydbank AS

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

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

Diversification Opportunities for Truist Financial and Sydbank AS

0.72

Correlation Coefficient

Truist Financial  Sydbank AS

Poor diversification

The 3 months correlation between Truist and Sydbank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Truist Financial i.e., Truist Financial and Sydbank AS go up and down completely randomly.

Pair Corralation between Truist Financial and Sydbank AS

Assuming the 90 days horizon Truist Financial is expected to under-perform the Sydbank AS. But the stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 1.72 times less risky than Sydbank AS. The stock trades about -0.39 of its potential returns per unit of risk. The Sydbank AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,764  in Sydbank AS on September 23, 2024 and sell it today you would lose (92.00) from holding Sydbank AS or give up 1.93% of portfolio value over 90 days.

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

Truist Financial  vs.  Sydbank AS

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.

Sydbank AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sydbank AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Truist Financial and Sydbank AS

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

The idea behind Truist Financial and Sydbank AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.