Correlation Between Regions Financial and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Gilead Sciences 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 Gilead Sciences 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 Gilead Sciences, you can compare the effects of market volatilities on Regions Financial and Gilead Sciences 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 Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Gilead Sciences.
Diversification Opportunities for Regions Financial and Gilead Sciences
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Gilead is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences 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 Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Regions Financial i.e., Regions Financial and Gilead Sciences go up and down completely randomly.
Pair Corralation between Regions Financial and Gilead Sciences
Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 1.08 times more return on investment than Gilead Sciences. However, Regions Financial is 1.08 times more volatile than Gilead Sciences. It trades about 0.26 of its potential returns per unit of risk. Gilead Sciences is currently generating about 0.12 per unit of risk. If you would invest 2,419 in Regions Financial Corp on August 31, 2024 and sell it today you would earn a total of 310.00 from holding Regions Financial Corp or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial Corp vs. Gilead Sciences
Performance |
| Timeline |
| Regions Financial Corp |
| Gilead Sciences |
Regions Financial and Gilead Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Gilead Sciences
The main advantage of trading using opposite Regions Financial and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.| Regions Financial vs. Neometals | Regions Financial vs. Coor Service Management | Regions Financial vs. Aeorema Communications Plc | Regions Financial vs. JLEN Environmental Assets |
| Gilead Sciences vs. CompuGroup Medical AG | Gilead Sciences vs. Lendinvest PLC | Gilead Sciences vs. Regions Financial Corp | Gilead Sciences vs. Discover Financial Services |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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