Correlation Between Regions Financial and Air Products
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Air Products 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 Regions Financial and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial Corp and Air Products Chemicals, you can compare the effects of market volatilities on Regions Financial and Air Products 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 Regions Financial with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Air Products.
Diversification Opportunities for Regions Financial and Air Products
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Air is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Regions 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 Regions Financial Corp are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Regions Financial i.e., Regions Financial and Air Products go up and down completely randomly.
Pair Corralation between Regions Financial and Air Products
Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 1.83 times more return on investment than Air Products. However, Regions Financial is 1.83 times more volatile than Air Products Chemicals. It trades about -0.37 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.72 per unit of risk. If you would invest 2,701 in Regions Financial Corp on September 30, 2024 and sell it today you would lose (323.00) from holding Regions Financial Corp or give up 11.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial Corp vs. Air Products Chemicals
Performance |
| Timeline |
| Regions Financial Corp |
| Air Products Chemicals |
Regions Financial and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Air Products
The main advantage of trading using opposite Regions Financial and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Regions Financial vs. Hilton Food Group | Regions Financial vs. Trellus Health plc | Regions Financial vs. Tyson Foods Cl | Regions Financial vs. Sligro Food Group |
| Air Products vs. Uniper SE | Air Products vs. Mulberry Group PLC | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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