Correlation Between Independent Bank and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Independent Bank 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 Independent Bank and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independent Bank Group and Regions Financial, you can compare the effects of market volatilities on Independent Bank 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 Independent Bank with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independent Bank and Regions Financial.
Diversification Opportunities for Independent Bank and Regions Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Independent and Regions is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Independent Bank Group and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Independent 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 Independent Bank 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 Independent Bank i.e., Independent Bank and Regions Financial go up and down completely randomly.
Pair Corralation between Independent Bank and Regions Financial
Given the investment horizon of 90 days Independent Bank Group is expected to generate 1.38 times more return on investment than Regions Financial. However, Independent Bank is 1.38 times more volatile than Regions Financial. It trades about 0.11 of its potential returns per unit of risk. Regions Financial is currently generating about 0.15 per unit of risk. If you would invest 5,704 in Independent Bank Group on August 31, 2024 and sell it today you would earn a total of 1,022 from holding Independent Bank Group or generate 17.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independent Bank Group vs. Regions Financial
Performance |
| Timeline |
| Independent Bank |
| Regions Financial |
Independent Bank and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independent Bank and Regions Financial
The main advantage of trading using opposite Independent Bank and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independent Bank 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.| Independent Bank vs. Heritage Financial | Independent Bank vs. ConnectOne Bancorp | Independent Bank vs. Home Bancorp | Independent Bank vs. National Bank Holdings |
| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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