Correlation Between Truist Financial and Citizens Community

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

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

Diversification Opportunities for Truist Financial and Citizens Community

0.54

Correlation Coefficient

Truist Financial  Citizens Community

Very weak diversification

The 3 months correlation between Truist and Citizens is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Citizens Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Community 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 Corp are associated (or correlated) with Citizens Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Community has no effect on the direction of Truist Financial i.e., Truist Financial and Citizens Community go up and down completely randomly.

Pair Corralation between Truist Financial and Citizens Community

Considering the 90-day investment horizon Truist Financial Corp is expected to generate 1.17 times more return on investment than Citizens Community. However, Truist Financial is 1.17 times more volatile than Citizens Community Bancorp. It trades about -0.01 of its potential returns per unit of risk. Citizens Community Bancorp is currently generating about -0.09 per unit of risk. If you would invest  4,288  in Truist Financial Corp on December 28, 2024 and sell it today you would lose (90.00) from holding Truist Financial Corp or give up 2.1% of portfolio value over 90 days.

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

Truist Financial Corp  vs.  Citizens Community Bancorp

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.

Citizens Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Community Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Truist Financial and Citizens Community

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

The idea behind Truist Financial Corp and Citizens Community Bancorp 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.