Correlation Between Truist Financial and Cadence Bancorp

Can any of the company-specific risk be diversified away by investing in both Truist Financial and Cadence 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 Cadence 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 Cadence Bancorp, you can compare the effects of market volatilities on Truist Financial and Cadence 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 Cadence Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Cadence Bancorp.

Diversification Opportunities for Truist Financial and Cadence Bancorp

0.54

Correlation Coefficient

Truist Financial  Cadence Bancorp

Very weak diversification

The 3 months correlation between Truist and Cadence is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence 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 Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and Cadence Bancorp go up and down completely randomly.

Pair Corralation between Truist Financial and Cadence Bancorp

Assuming the 90 days trading horizon Truist Financial is expected to generate 3.28 times less return on investment than Cadence Bancorp. But when comparing it to its historical volatility, Truist Financial is 3.24 times less risky than Cadence Bancorp. It trades about 0.22 of its potential returns per unit of risk. Cadence Bancorp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,006  in Cadence Bancorp on June 18, 2025 and sell it today you would earn a total of  764.00  from holding Cadence Bancorp or generate 25.42% return on investment over 90 days.

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

Truist Financial  vs.  Cadence Bancorp

Truist Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Truist Financial may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Cadence Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Cadence Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and Cadence Bancorp

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

The idea behind Truist Financial and Cadence 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.