Correlation Between Old National and Truist Financial

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

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

Diversification Opportunities for Old National and Truist Financial

0.94

Correlation Coefficient

Old National  Truist Financial

Almost no diversification

The 3 months correlation between Old and Truist is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Old National 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 Old National 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 Old National 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 Old National i.e., Old National and Truist Financial go up and down completely randomly.

Pair Corralation between Old National and Truist Financial

Considering the 90-day investment horizon Old National Bancorp is expected to generate 1.17 times more return on investment than Truist Financial. However, Old National is 1.17 times more volatile than Truist Financial Corp. It trades about -0.01 of its potential returns per unit of risk. Truist Financial Corp is currently generating about -0.03 per unit of risk. If you would invest  2,186  in Old National Bancorp on December 26, 2024 and sell it today you would lose (39.00) from holding Old National Bancorp or give up 1.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Old National Bancorp  vs.  Truist Financial Corp

Old National Bancorp

Risk-Adjusted Performance

Very Weak

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

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 Old National and Truist Financial

The main advantage of trading using opposite Old National and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old National 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 Old National 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.