Correlation Between Truist Financial and Customers Bancorp

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

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

Diversification Opportunities for Truist Financial and Customers Bancorp

-0.4

Correlation Coefficient

Truist Financial  Customers Bancorp

Very good diversification

The 3 months correlation between Truist and Customers is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp 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 are associated (or correlated) with Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Customers Bancorp go up and down completely randomly.

Pair Corralation between Truist Financial and Customers Bancorp

Assuming the 90 days trading horizon Truist Financial is expected to generate 0.34 times more return on investment than Customers Bancorp. However, Truist Financial is 2.92 times less risky than Customers Bancorp. It trades about 0.13 of its potential returns per unit of risk. Customers Bancorp is currently generating about -0.22 per unit of risk. If you would invest  2,374  in Truist Financial on June 29, 2024 and sell it today you would earn a total of  46.00  from holding Truist Financial or generate 1.94% return on investment over 90 days.

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

Truist Financial  vs.  Customers Bancorp

Truist Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Customers Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Customers Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Customers Bancorp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Truist Financial and Customers Bancorp

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

The idea behind Truist Financial and Customers 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.