Correlation Between Stock Yards and Trustmark

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

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

Diversification Opportunities for Stock Yards and Trustmark

0.91

Correlation Coefficient

Stock Yards  Trustmark

Almost no diversification

The 3 months correlation between Stock and Trustmark is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Stock Yards Bancorp and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark and Stock Yards 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 Stock Yards Bancorp are associated (or correlated) with Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of Stock Yards i.e., Stock Yards and Trustmark go up and down completely randomly.

Pair Corralation between Stock Yards and Trustmark

Given the investment horizon of 90 days Stock Yards Bancorp is expected to generate 1.02 times more return on investment than Trustmark. However, Stock Yards is 1.02 times more volatile than Trustmark. It trades about -0.02 of its potential returns per unit of risk. Trustmark is currently generating about -0.02 per unit of risk. If you would invest  7,172  in Stock Yards Bancorp on December 29, 2024 and sell it today you would lose (188.00) from holding Stock Yards Bancorp or give up 2.62% of portfolio value over 90 days.

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

Stock Yards Bancorp  vs.  Trustmark

Stock Yards Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stock Yards Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Stock Yards is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Trustmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trustmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Trustmark is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Stock Yards and Trustmark

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

The idea behind Stock Yards Bancorp and Trustmark 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.