Correlation Between HomeTrust Bancshares and Truist Financial

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

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

Diversification Opportunities for HomeTrust Bancshares and Truist Financial

0.92

Correlation Coefficient

HomeTrust Bancshares  Truist Financial

Almost no diversification

The 3 months correlation between HomeTrust and Truist is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares i.e., HomeTrust Bancshares and Truist Financial go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Truist Financial

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.3 times more return on investment than Truist Financial. However, HomeTrust Bancshares is 1.3 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 0.09 per unit of risk. If you would invest  2,771  in HomeTrust Bancshares on September 23, 2024 and sell it today you would earn a total of  641.00  from holding HomeTrust Bancshares or generate 23.13% return on investment over 90 days.

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

HomeTrust Bancshares  vs.  Truist Financial Corp

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Truist Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 HomeTrust Bancshares and Truist Financial

The main advantage of trading using opposite HomeTrust Bancshares and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares 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 HomeTrust Bancshares 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.