Correlation Between Dow Jones and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Regions Financial, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Regions Financial.
Diversification Opportunities for Dow Jones and Regions Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Regions is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Dow Jones 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 Dow Jones Industrial 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 has no effect on the direction of Dow Jones i.e., Dow Jones and Regions Financial go up and down completely randomly.
Pair Corralation between Dow Jones and Regions Financial
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.72 times more return on investment than Regions Financial. However, Dow Jones Industrial is 1.39 times less risky than Regions Financial. It trades about 0.11 of its potential returns per unit of risk. Regions Financial is currently generating about 0.07 per unit of risk. If you would invest 3,815,030 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 658,627 from holding Dow Jones Industrial or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Regions Financial
Performance |
| Timeline |
Dow Jones and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Regions Financial
Pair trading matchups for Regions Financial
Pair Trading with Dow Jones and Regions Financial
The main advantage of trading using opposite Dow Jones and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Regions Financial vs. JBG SMITH Properties | Regions Financial vs. Where Food Comes | Regions Financial vs. Merit Medical Systems | Regions Financial vs. HNI 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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