Correlation Between Regions Financial and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Aberdeen Diversified 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 Aberdeen Diversified 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 Aberdeen Diversified Income, you can compare the effects of market volatilities on Regions Financial and Aberdeen Diversified 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 Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Aberdeen Diversified.
Diversification Opportunities for Regions Financial and Aberdeen Diversified
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regions and Aberdeen is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified 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 Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Regions Financial i.e., Regions Financial and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between Regions Financial and Aberdeen Diversified
Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 0.77 times more return on investment than Aberdeen Diversified. However, Regions Financial Corp is 1.3 times less risky than Aberdeen Diversified. It trades about 0.13 of its potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.02 per unit of risk. If you would invest 2,203 in Regions Financial Corp on September 14, 2024 and sell it today you would earn a total of 303.00 from holding Regions Financial Corp or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial Corp vs. Aberdeen Diversified Income
Performance |
| Timeline |
| Regions Financial Corp |
| Aberdeen Diversified |
Regions Financial and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Aberdeen Diversified
The main advantage of trading using opposite Regions Financial and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Aberdeen Diversified 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 Aberdeen Diversified will offset losses from the drop in Aberdeen Diversified's 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 |
| Aberdeen Diversified vs. JB Hunt Transport | Aberdeen Diversified vs. Norman Broadbent Plc | Aberdeen Diversified vs. EVS Broadcast Equipment | Aberdeen Diversified vs. Regions Financial Corp |
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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