Correlation Between Regional Bank and Us Global
Can any of the company-specific risk be diversified away by investing in both Regional Bank and Us Global 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 Us Global 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 Us Global Leaders, you can compare the effects of market volatilities on Regional Bank and Us Global 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 Us Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Bank and Us Global.
Diversification Opportunities for Regional Bank and Us Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regional and USGLX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Regional Bank Fund and Us Global Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Leaders 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 Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Leaders has no effect on the direction of Regional Bank i.e., Regional Bank and Us Global go up and down completely randomly.
Pair Corralation between Regional Bank and Us Global
Assuming the 90 days horizon Regional Bank Fund is expected to generate 2.69 times more return on investment than Us Global. However, Regional Bank is 2.69 times more volatile than Us Global Leaders. It trades about 0.13 of its potential returns per unit of risk. Us Global Leaders is currently generating about 0.15 per unit of risk. If you would invest 2,876 in Regional Bank Fund on September 2, 2024 and sell it today you would earn a total of 506.00 from holding Regional Bank Fund or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Bank Fund vs. Us Global Leaders
Performance |
| Timeline |
| Regional Bank |
| Us Global Leaders |
Regional Bank and Us Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Bank and Us Global
The main advantage of trading using opposite Regional Bank and Us Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Bank position performs unexpectedly, Us Global 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 Us Global will offset losses from the drop in Us Global's long position.| Regional Bank vs. Tax Managed Mid Small | Regional Bank vs. Touchstone Small Cap | Regional Bank vs. Artisan Small Cap | Regional Bank vs. Champlain Small |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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