Correlation Between Triumph Financial and OFG Bancorp

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

By analyzing existing cross correlation between Triumph Financial and OFG Bancorp, you can compare the effects of market volatilities on Triumph Financial and OFG 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 Triumph Financial with a short position of OFG Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph Financial and OFG Bancorp.

Diversification Opportunities for Triumph Financial and OFG Bancorp

0.61

Correlation Coefficient

Triumph Financial  OFG Bancorp

Poor diversification

The 3 months correlation between Triumph and OFG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Financial and OFG Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFG Bancorp and Triumph 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 Triumph Financial are associated (or correlated) with OFG Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFG Bancorp has no effect on the direction of Triumph Financial i.e., Triumph Financial and OFG Bancorp go up and down completely randomly.

Pair Corralation between Triumph Financial and OFG Bancorp

Assuming the 90 days horizon Triumph Financial is expected to under-perform the OFG Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Triumph Financial is 1.5 times less risky than OFG Bancorp. The stock trades about -0.08 of its potential returns per unit of risk. The OFG Bancorp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,259  in OFG Bancorp on December 28, 2024 and sell it today you would lose (162.00) from holding OFG Bancorp or give up 3.8% of portfolio value over 90 days.

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

Triumph Financial  vs.  OFG Bancorp

Triumph Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triumph Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Triumph Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

OFG Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFG Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, OFG Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Triumph Financial and OFG Bancorp

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

The idea behind Triumph Financial and OFG 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.