Correlation Between Truist Financial and First Commonwealth

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

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

Diversification Opportunities for Truist Financial and First Commonwealth

-0.49

Correlation Coefficient

Truist Financial  First Commonwealth

Very good diversification

The 3 months correlation between Truist and First is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Truist Financial i.e., Truist Financial and First Commonwealth go up and down completely randomly.

Pair Corralation between Truist Financial and First Commonwealth

Assuming the 90 days trading horizon Truist Financial is expected to under-perform the First Commonwealth. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 1.69 times less risky than First Commonwealth. The preferred stock trades about -0.23 of its potential returns per unit of risk. The First Commonwealth Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,602  in First Commonwealth Financial on May 10, 2025 and sell it today you would earn a total of  52.00  from holding First Commonwealth Financial or generate 3.25% 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.  First Commonwealth Financial

Truist Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

First Commonwealth

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Commonwealth Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, First Commonwealth is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Truist Financial and First Commonwealth

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

The idea behind Truist Financial and First Commonwealth 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.