Correlation Between Japan Medical and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Japan Medical 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 Japan Medical and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Regions Financial, you can compare the effects of market volatilities on Japan Medical 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 Japan Medical with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Regions Financial.
Diversification Opportunities for Japan Medical and Regions Financial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Regions is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Japan Medical 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 Japan Medical Dynamic 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 Japan Medical i.e., Japan Medical and Regions Financial go up and down completely randomly.
Pair Corralation between Japan Medical and Regions Financial
Assuming the 90 days horizon Japan Medical is expected to generate 1.97 times less return on investment than Regions Financial. But when comparing it to its historical volatility, Japan Medical Dynamic is 1.17 times less risky than Regions Financial. It trades about 0.02 of its potential returns per unit of risk. Regions Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,159 in Regions Financial on December 1, 2024 and sell it today you would earn a total of 61.00 from holding Regions Financial or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Regions Financial
Performance |
| Timeline |
| Japan Medical Dynamic |
| Regions Financial |
Japan Medical and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Regions Financial
The main advantage of trading using opposite Japan Medical and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical 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.| Japan Medical vs. Sims Metal Management | Japan Medical vs. Jupiter Fund Management | Japan Medical vs. INTERSHOP Communications Aktiengesellschaft | Japan Medical vs. Ares Management Corp |
| Regions Financial vs. Sabre Insurance Group | Regions Financial vs. Zurich Insurance Group | Regions Financial vs. VIENNA INSURANCE GR | Regions Financial vs. Indutrade AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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