Correlation Between Truist Financial and New Oriental

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

By analyzing existing cross correlation between Truist Financial and New Oriental Education, you can compare the effects of market volatilities on Truist Financial and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and New Oriental.

Diversification Opportunities for Truist Financial and New Oriental

-0.21

Correlation Coefficient

Truist Financial  New Oriental

Very good diversification

The 3 months correlation between Truist and New is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Truist Financial i.e., Truist Financial and New Oriental go up and down completely randomly.

Pair Corralation between Truist Financial and New Oriental

Assuming the 90 days trading horizon Truist Financial is expected to generate 0.89 times more return on investment than New Oriental. However, Truist Financial is 1.13 times less risky than New Oriental. It trades about 0.08 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.01 per unit of risk. If you would invest  23,113  in Truist Financial on April 25, 2025 and sell it today you would earn a total of  2,407  from holding Truist Financial or generate 10.41% return on investment over 90 days.

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

Truist Financial  vs.  New Oriental Education

Truist Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

New Oriental Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, New Oriental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Truist Financial and New Oriental

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

The idea behind Truist Financial and New Oriental Education 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.