Correlation Between Regional Bank and Sp 500
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Sp 500 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 Regional Bank and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Bank Fund and Sp 500 Equal, you can compare the effects of market volatilities on Regional Bank and Sp 500 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 Regional Bank with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Sp 500.
Diversification Opportunities for Regional Bank and Sp 500
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regional and INDEX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal and Regional Bank 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 Regional Bank Fund are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of Regional Bank i.e., Regional Bank and Sp 500 go up and down completely randomly.
Pair Corralation between Regional Bank and Sp 500
Assuming the 90 days horizon Regional Bank Fund is expected to under-perform the Sp 500. In addition to that, Regional Bank is 1.55 times more volatile than Sp 500 Equal. It trades about -0.04 of its total potential returns per unit of risk. Sp 500 Equal is currently generating about 0.17 per unit of volatility. If you would invest 5,714 in Sp 500 Equal on September 13, 2024 and sell it today you would earn a total of 104.00 from holding Sp 500 Equal or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Sp 500 Equal
Performance |
| Timeline |
| Regional Bank |
| Sp 500 Equal |
Regional Bank and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Sp 500
The main advantage of trading using opposite Regional Bank and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Regional Bank vs. Putnam Convertible Incm Gwth | Regional Bank vs. Lord Abbett Convertible | Regional Bank vs. Allianzgi Convertible Income | Regional Bank vs. Calamos Dynamic Convertible |
| Sp 500 vs. Fa 529 Aggressive | Sp 500 vs. Artisan High Income | Sp 500 vs. Needham Aggressive Growth | Sp 500 vs. Lgm Risk Managed |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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