Correlation Between Metalrgica Riosulense and Truist Financial

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

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

Diversification Opportunities for Metalrgica Riosulense and Truist Financial

-0.79

Correlation Coefficient

Metalrgica Riosulense  Truist Financial

Pay attention - limited upside

The 3 months correlation between Metalrgica and Truist is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Metalrgica Riosulense SA and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and Metalrgica Riosulense 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 Metalrgica Riosulense SA 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 has no effect on the direction of Metalrgica Riosulense i.e., Metalrgica Riosulense and Truist Financial go up and down completely randomly.

Pair Corralation between Metalrgica Riosulense and Truist Financial

Assuming the 90 days trading horizon Metalrgica Riosulense SA is expected to under-perform the Truist Financial. In addition to that, Metalrgica Riosulense is 1.03 times more volatile than Truist Financial. It trades about -0.12 of its total potential returns per unit of risk. Truist Financial is currently generating about 0.17 per unit of volatility. If you would invest  22,844  in Truist Financial on October 10, 2024 and sell it today you would earn a total of  3,862  from holding Truist Financial or generate 16.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Metalrgica Riosulense SA  vs.  Truist Financial

Metalrgica Riosulense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalrgica Riosulense SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Truist Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Truist Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalrgica Riosulense and Truist Financial

The main advantage of trading using opposite Metalrgica Riosulense and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalrgica Riosulense 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 Metalrgica Riosulense SA and Truist Financial 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.