Correlation Between Midland States and Truist Financial

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

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

Diversification Opportunities for Midland States and Truist Financial

0.66

Correlation Coefficient

Midland States  Truist Financial

Poor diversification

The 3 months correlation between Midland and Truist is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Midland States Bancorp and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and Midland States 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 Midland States Bancorp 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 Midland States i.e., Midland States and Truist Financial go up and down completely randomly.

Pair Corralation between Midland States and Truist Financial

Given the investment horizon of 90 days Midland States Bancorp is expected to under-perform the Truist Financial. In addition to that, Midland States is 2.94 times more volatile than Truist Financial. It trades about -0.05 of its total potential returns per unit of risk. Truist Financial is currently generating about 0.08 per unit of volatility. If you would invest  1,884  in Truist Financial on May 5, 2025 and sell it today you would earn a total of  58.00  from holding Truist Financial or generate 3.08% return on investment over 90 days.

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

Midland States Bancorp  vs.  Truist Financial

Midland States Bancorp

Risk-Adjusted Performance

Very Weak

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

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. Even with relatively invariable fundamental indicators, Truist Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Midland States and Truist Financial

The main advantage of trading using opposite Midland States and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midland States 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 Midland States Bancorp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.