Correlation Between FARM 51 and Regions Financial
Can any of the company-specific risk be diversified away by investing in both FARM 51 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 FARM 51 and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Regions Financial, you can compare the effects of market volatilities on FARM 51 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 FARM 51 with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Regions Financial.
Diversification Opportunities for FARM 51 and Regions Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FARM and Regions is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and FARM 51 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 FARM 51 GROUP 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 FARM 51 i.e., FARM 51 and Regions Financial go up and down completely randomly.
Pair Corralation between FARM 51 and Regions Financial
Assuming the 90 days horizon FARM 51 GROUP is expected to under-perform the Regions Financial. In addition to that, FARM 51 is 1.48 times more volatile than Regions Financial. It trades about -0.03 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.03 per unit of volatility. If you would invest 1,953 in Regions Financial on October 16, 2024 and sell it today you would earn a total of 347.00 from holding Regions Financial or generate 17.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. Regions Financial
Performance |
| Timeline |
| FARM 51 GROUP |
| Regions Financial |
FARM 51 and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Regions Financial
The main advantage of trading using opposite FARM 51 and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 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.The idea behind FARM 51 GROUP and Regions Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Regions Financial vs. MPH Health Care | Regions Financial vs. National Health Investors | Regions Financial vs. FARM 51 GROUP | Regions Financial vs. UNIDOC HEALTH P |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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