Correlation Between Truist Financial and Virginia National

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

Diversification Opportunities for Truist Financial and Virginia National

-0.01

Correlation Coefficient

Truist Financial  Virginia National

Good diversification

The 3 months correlation between Truist and Virginia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial Corp and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Truist Financial i.e., Truist Financial and Virginia National go up and down completely randomly.

Pair Corralation between Truist Financial and Virginia National

Considering the 90-day investment horizon Truist Financial Corp is expected to under-perform the Virginia National. But the stock apears to be less risky and, when comparing its historical volatility, Truist Financial Corp is 1.01 times less risky than Virginia National. The stock trades about -0.01 of its potential returns per unit of risk. The Virginia National Bankshares is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,756  in Virginia National Bankshares on December 28, 2024 and sell it today you would lose (11.00) from holding Virginia National Bankshares or give up 0.29% of portfolio value over 90 days.

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

Truist Financial Corp  vs.  Virginia National Bankshares

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.

Virginia National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Virginia National is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Truist Financial and Virginia National

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

The idea behind Truist Financial Corp and Virginia National Bankshares 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.