Correlation Between Regions Financial and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Regions Financial and General Dynamics 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 General Dynamics 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 General Dynamics Corp, you can compare the effects of market volatilities on Regions Financial and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and General Dynamics.
Diversification Opportunities for Regions Financial and General Dynamics
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regions and General is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics Corp has no effect on the direction of Regions Financial i.e., Regions Financial and General Dynamics go up and down completely randomly.
Pair Corralation between Regions Financial and General Dynamics
Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 0.6 times more return on investment than General Dynamics. However, Regions Financial Corp is 1.68 times less risky than General Dynamics. It trades about -0.09 of its potential returns per unit of risk. General Dynamics Corp is currently generating about -0.41 per unit of risk. If you would invest 2,593 in Regions Financial Corp on September 13, 2024 and sell it today you would lose (57.00) from holding Regions Financial Corp or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Regions Financial Corp vs. General Dynamics Corp
Performance |
| Timeline |
| Regions Financial Corp |
| General Dynamics Corp |
Regions Financial and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and General Dynamics
The main advantage of trading using opposite Regions Financial and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Regions Financial vs. Schroders Investment Trusts | Regions Financial vs. BW Offshore | Regions Financial vs. Lowland Investment Co | Regions Financial vs. Nordic Semiconductor ASA |
| General Dynamics vs. Capital Drilling | General Dynamics vs. Tyson Foods Cl | General Dynamics vs. Gaztransport et Technigaz | General Dynamics vs. Austevoll Seafood ASA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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