Correlation Between Truist Financial and Pinnacle Bank

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

Diversification Opportunities for Truist Financial and Pinnacle Bank

0.4

Correlation Coefficient

Truist Financial  Pinnacle Bank

Very weak diversification

The 3 months correlation between Truist and Pinnacle is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank 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 Pinnacle Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bank has no effect on the direction of Truist Financial i.e., Truist Financial and Pinnacle Bank go up and down completely randomly.

Pair Corralation between Truist Financial and Pinnacle Bank

Considering the 90-day investment horizon Truist Financial Corp is expected to generate 2.43 times more return on investment than Pinnacle Bank. However, Truist Financial is 2.43 times more volatile than Pinnacle Bank. It trades about 0.08 of its potential returns per unit of risk. Pinnacle Bank is currently generating about 0.1 per unit of risk. If you would invest  4,372  in Truist Financial Corp on September 3, 2024 and sell it today you would earn a total of  396.00  from holding Truist Financial Corp or generate 9.06% return on investment over 90 days.

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

Truist Financial Corp  vs.  Pinnacle Bank

Truist Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pinnacle Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pinnacle Bank 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 Truist Financial and Pinnacle Bank

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

The idea behind Truist Financial Corp and Pinnacle Bank 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.