Correlation Between Regions Financial and Roebuck Food
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Roebuck Food 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 Roebuck Food 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 Roebuck Food Group, you can compare the effects of market volatilities on Regions Financial and Roebuck Food 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 Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Roebuck Food.
Diversification Opportunities for Regions Financial and Roebuck Food
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Roebuck is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food Group 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 Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Regions Financial i.e., Regions Financial and Roebuck Food go up and down completely randomly.
Pair Corralation between Regions Financial and Roebuck Food
Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 1.28 times more return on investment than Roebuck Food. However, Regions Financial is 1.28 times more volatile than Roebuck Food Group. It trades about 0.07 of its potential returns per unit of risk. Roebuck Food Group is currently generating about 0.02 per unit of risk. If you would invest 1,735 in Regions Financial Corp on August 31, 2024 and sell it today you would earn a total of 982.00 from holding Regions Financial Corp or generate 56.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Regions Financial Corp vs. Roebuck Food Group
Performance |
| Timeline |
| Regions Financial Corp |
| Roebuck Food Group |
Regions Financial and Roebuck Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Roebuck Food
The main advantage of trading using opposite Regions Financial and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food's long position.| Regions Financial vs. Neometals | Regions Financial vs. Coor Service Management | Regions Financial vs. Aeorema Communications Plc | Regions Financial vs. JLEN Environmental Assets |
| Roebuck Food vs. Wheaton Precious Metals | Roebuck Food vs. International Consolidated Airlines | Roebuck Food vs. Coeur Mining | Roebuck Food vs. CAP LEASE AVIATION |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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