Correlation Between THORNEY TECHS and Truist Financial

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

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

Diversification Opportunities for THORNEY TECHS and Truist Financial

0.05

Correlation Coefficient

THORNEY TECHS  Truist Financial

Significant diversification

The 3 months correlation between THORNEY and Truist is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and Truist Financial go up and down completely randomly.

Pair Corralation between THORNEY TECHS and Truist Financial

Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the Truist Financial. In addition to that, THORNEY TECHS is 1.77 times more volatile than Truist Financial. It trades about -0.06 of its total potential returns per unit of risk. Truist Financial is currently generating about 0.12 per unit of volatility. If you would invest  3,887  in Truist Financial on October 26, 2024 and sell it today you would earn a total of  601.00  from holding Truist Financial or generate 15.46% return on investment over 90 days.

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

THORNEY TECHS LTD  vs.  Truist Financial

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THORNEY TECHS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Truist Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Truist Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THORNEY TECHS and Truist Financial

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

The idea behind THORNEY TECHS LTD and Truist Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.