Correlation Between Truist Financial and Eagle Bancorp

Can any of the company-specific risk be diversified away by investing in both Truist Financial and Eagle Bancorp 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 Eagle Bancorp 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 Eagle Bancorp Montana, you can compare the effects of market volatilities on Truist Financial and Eagle Bancorp 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Eagle Bancorp.

Diversification Opportunities for Truist Financial and Eagle Bancorp

-0.11

Correlation Coefficient

Truist Financial  Eagle Bancorp

Good diversification

The 3 months correlation between Truist and Eagle is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp Montana has no effect on the direction of Truist Financial i.e., Truist Financial and Eagle Bancorp go up and down completely randomly.

Pair Corralation between Truist Financial and Eagle Bancorp

Considering the 90-day investment horizon Truist Financial Corp is expected to under-perform the Eagle Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Truist Financial Corp is 1.04 times less risky than Eagle Bancorp. The stock trades about -0.04 of its potential returns per unit of risk. The Eagle Bancorp Montana is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,516  in Eagle Bancorp Montana on December 25, 2024 and sell it today you would earn a total of  183.00  from holding Eagle Bancorp Montana or generate 12.07% return on investment over 90 days.

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

Truist Financial Corp  vs.  Eagle Bancorp Montana

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.

Eagle Bancorp Montana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Bancorp Montana are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Eagle Bancorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and Eagle Bancorp

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

The idea behind Truist Financial Corp and Eagle Bancorp Montana 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.