Correlation Between Trustmark and Old National

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

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

Diversification Opportunities for Trustmark and Old National

0.9

Correlation Coefficient

Trustmark  Old National

Almost no diversification

The 3 months correlation between Trustmark and Old is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Trustmark and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp and Trustmark 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 Trustmark are associated (or correlated) with Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Trustmark i.e., Trustmark and Old National go up and down completely randomly.

Pair Corralation between Trustmark and Old National

Given the investment horizon of 90 days Trustmark is expected to under-perform the Old National. But the stock apears to be less risky and, when comparing its historical volatility, Trustmark is 1.2 times less risky than Old National. The stock trades about -0.02 of its potential returns per unit of risk. The Old National Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,137  in Old National Bancorp on December 20, 2024 and sell it today you would earn a total of  23.00  from holding Old National Bancorp or generate 1.08% return on investment over 90 days.

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

Trustmark  vs.  Old National Bancorp

Trustmark

Risk-Adjusted Performance

Very Weak

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

Old National Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old National Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Old National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Trustmark and Old National

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

The idea behind Trustmark and Old National 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.