Correlation Between Commerzbank and REGIONS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Commerzbank and REGIONS FINANCIAL 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 Commerzbank and REGIONS FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and REGIONS FINANCIAL PFD, you can compare the effects of market volatilities on Commerzbank and REGIONS FINANCIAL 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 Commerzbank with a short position of REGIONS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and REGIONS FINANCIAL.
Diversification Opportunities for Commerzbank and REGIONS FINANCIAL
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commerzbank and REGIONS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and REGIONS FINANCIAL PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGIONS FINANCIAL PFD and Commerzbank 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 Commerzbank AG are associated (or correlated) with REGIONS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGIONS FINANCIAL PFD has no effect on the direction of Commerzbank i.e., Commerzbank and REGIONS FINANCIAL go up and down completely randomly.
Pair Corralation between Commerzbank and REGIONS FINANCIAL
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 1.38 times more return on investment than REGIONS FINANCIAL. However, Commerzbank is 1.38 times more volatile than REGIONS FINANCIAL PFD. It trades about 0.08 of its potential returns per unit of risk. REGIONS FINANCIAL PFD is currently generating about 0.06 per unit of risk. If you would invest 887.00 in Commerzbank AG on August 26, 2024 and sell it today you would earn a total of 648.00 from holding Commerzbank AG or generate 73.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerzbank AG vs. REGIONS FINANCIAL PFD
Performance |
| Timeline |
| Commerzbank AG |
| REGIONS FINANCIAL PFD |
Commerzbank and REGIONS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and REGIONS FINANCIAL
The main advantage of trading using opposite Commerzbank and REGIONS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank position performs unexpectedly, REGIONS FINANCIAL 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 REGIONS FINANCIAL will offset losses from the drop in REGIONS FINANCIAL's long position.| Commerzbank vs. KRISPY KREME DL 01 | Commerzbank vs. Iridium Communications | Commerzbank vs. HEMISPHERE EGY | Commerzbank vs. PACIFIC ONLINE |
| REGIONS FINANCIAL vs. Austevoll Seafood ASA | REGIONS FINANCIAL vs. American Eagle Outfitters | REGIONS FINANCIAL vs. Flutter Entertainment PLC | REGIONS FINANCIAL vs. CNVISION MEDIA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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