Correlation Between Truist Financial and Microsoft
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Microsoft, you can compare the effects of market volatilities on Truist Financial and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Microsoft.
Diversification Opportunities for Truist Financial and Microsoft
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Truist and Microsoft is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Truist Financial i.e., Truist Financial and Microsoft go up and down completely randomly.
Pair Corralation between Truist Financial and Microsoft
Assuming the 90 days trading horizon Truist Financial is expected to generate 0.66 times more return on investment than Microsoft. However, Truist Financial is 1.52 times less risky than Microsoft. It trades about -0.11 of its potential returns per unit of risk. Microsoft is currently generating about -0.08 per unit of risk. If you would invest 25,126 in Truist Financial on August 31, 2025 and sell it today you would lose (1,246) from holding Truist Financial or give up 4.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Microsoft
Performance |
| Timeline |
| Truist Financial |
| Microsoft |
Truist Financial and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Microsoft
The main advantage of trading using opposite Truist Financial and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Truist Financial vs. Taiwan Semiconductor Manufacturing | Truist Financial vs. Apple Inc | Truist Financial vs. Alibaba Group Holding | Truist Financial vs. Microsoft |
| Microsoft vs. Chunghwa Telecom Co, | Microsoft vs. Live Nation Entertainment, | Microsoft vs. Brpr Corporate Offices | Microsoft vs. Autohome |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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