Correlation Between Regional Bank and Strategic Income
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Strategic Income 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 Strategic Income 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 Strategic Income Opportunities, you can compare the effects of market volatilities on Regional Bank and Strategic Income 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 Strategic Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Strategic Income.
Diversification Opportunities for Regional Bank and Strategic Income
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regional and Strategic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Strategic Income Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Income Opp 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 Strategic Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Income Opp has no effect on the direction of Regional Bank i.e., Regional Bank and Strategic Income go up and down completely randomly.
Pair Corralation between Regional Bank and Strategic Income
Assuming the 90 days horizon Regional Bank Fund is expected to generate 12.22 times more return on investment than Strategic Income. However, Regional Bank is 12.22 times more volatile than Strategic Income Opportunities. It trades about 0.18 of its potential returns per unit of risk. Strategic Income Opportunities is currently generating about -0.17 per unit of risk. If you would invest 2,868 in Regional Bank Fund on August 30, 2024 and sell it today you would earn a total of 526.00 from holding Regional Bank Fund or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Regional Bank Fund vs. Strategic Income Opportunities
Performance |
| Timeline |
| Regional Bank |
| Strategic Income Opp |
Regional Bank and Strategic Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Strategic Income
The main advantage of trading using opposite Regional Bank and Strategic Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Strategic Income 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 Strategic Income will offset losses from the drop in Strategic Income's long position.| Regional Bank vs. Regional Bank Fund | Regional Bank vs. Regional Bank Fund | Regional Bank vs. Multimanager Lifestyle Moderate | Regional Bank vs. Multimanager Lifestyle Balanced |
| Strategic Income vs. Abr 7525 Volatility | Strategic Income vs. T Rowe Price | Strategic Income vs. Balanced Fund Investor | Strategic Income vs. Fa 529 Aggressive |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |