Correlation Between Truist Financial and Farmers National
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Farmers 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 Farmers National 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 Farmers National Banc, you can compare the effects of market volatilities on Truist Financial and Farmers 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 Farmers National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Farmers National.
Diversification Opportunities for Truist Financial and Farmers National
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Truist and Farmers is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Farmers National Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers 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 Corp are associated (or correlated) with Farmers National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers National Banc has no effect on the direction of Truist Financial i.e., Truist Financial and Farmers National go up and down completely randomly.
Pair Corralation between Truist Financial and Farmers National
Considering the 90-day investment horizon Truist Financial Corp is expected to generate 1.04 times more return on investment than Farmers National. However, Truist Financial is 1.04 times more volatile than Farmers National Banc. It trades about 0.06 of its potential returns per unit of risk. Farmers National Banc is currently generating about 0.03 per unit of risk. If you would invest 2,860 in Truist Financial Corp on December 4, 2024 and sell it today you would earn a total of 1,683 from holding Truist Financial Corp or generate 58.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Truist Financial Corp vs. Farmers National Banc
Performance |
Timeline |
Truist Financial Corp |
Farmers National Banc |
Truist Financial and Farmers National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Truist Financial and Farmers National
The main advantage of trading using opposite Truist Financial and Farmers National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Farmers 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 Farmers National will offset losses from the drop in Farmers National's long position.Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
Farmers National vs. First Business Financial | Farmers National vs. Old Point Financial | Farmers National vs. Parke Bancorp | Farmers National vs. Independent Bank |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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