Correlation Between TRUIST and Afya

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

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

Diversification Opportunities for TRUIST and Afya

0.07

Correlation Coefficient

TRUIST  Afya

Significant diversification

The 3 months correlation between TRUIST and Afya is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding TRUIST FINANCIAL P and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya and TRUIST 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 P are associated (or correlated) with Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of TRUIST i.e., TRUIST and Afya go up and down completely randomly.

Pair Corralation between TRUIST and Afya

Assuming the 90 days trading horizon TRUIST FINANCIAL P is expected to under-perform the Afya. But the bond apears to be less risky and, when comparing its historical volatility, TRUIST FINANCIAL P is 2.01 times less risky than Afya. The bond trades about -0.11 of its potential returns per unit of risk. The Afya is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,659  in Afya on December 2, 2024 and sell it today you would earn a total of  17.00  from holding Afya or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

TRUIST FINANCIAL P  vs.  Afya

TRUIST FINANCIAL P

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRUIST FINANCIAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for TRUIST FINANCIAL P investors.

Afya

Risk-Adjusted Performance

Weak

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

Pair Trading with TRUIST and Afya

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

The idea behind TRUIST FINANCIAL P and Afya 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.