Correlation Between London Security and Regions Financial
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Regions Financial Corp, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Regions Financial.
Diversification Opportunities for London Security and Regions Financial
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Regions is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp and London Security 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 London Security Plc 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 Corp has no effect on the direction of London Security i.e., London Security and Regions Financial go up and down completely randomly.
Pair Corralation between London Security and Regions Financial
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the Regions Financial. But the stock apears to be less risky and, when comparing its historical volatility, London Security Plc is 1.28 times less risky than Regions Financial. The stock trades about -0.18 of its potential returns per unit of risk. The Regions Financial Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,324 in Regions Financial Corp on September 2, 2024 and sell it today you would earn a total of 393.00 from holding Regions Financial Corp or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Regions Financial Corp
Performance |
| Timeline |
| London Security Plc |
| Regions Financial Corp |
London Security and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Regions Financial
The main advantage of trading using opposite London Security and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Zoom Video Communications | London Security vs. Amedeo Air Four | London Security vs. Power Metal Resources | London Security vs. Pentair PLC |
| Regions Financial vs. Uniper SE | Regions Financial vs. Mulberry Group PLC | Regions Financial vs. London Security Plc | Regions Financial vs. Triad Group PLC |
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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