Correlation Between Truist Financial and Auburn National

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

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

Diversification Opportunities for Truist Financial and Auburn National

-0.46

Correlation Coefficient

Truist Financial  Auburn National

Very good diversification

The 3 months correlation between Truist and Auburn is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc 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 Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Truist Financial i.e., Truist Financial and Auburn National go up and down completely randomly.

Pair Corralation between Truist Financial and Auburn National

Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Auburn National. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 2.49 times less risky than Auburn National. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Auburn National Bancorporation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,985  in Auburn National Bancorporation on September 12, 2024 and sell it today you would earn a total of  365.00  from holding Auburn National Bancorporation or generate 18.39% return on investment over 90 days.

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

Truist Financial  vs.  Auburn National Bancorp.

Truist Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Truist Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Auburn National Banc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and Auburn National

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

The idea behind Truist Financial and Auburn National Bancorporation 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 Stocks Directory module to find actively traded stocks across global markets.