Correlation Between Primo Brands and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Primo Brands 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 Primo Brands and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primo Brands and Regions Financial, you can compare the effects of market volatilities on Primo Brands 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 Primo Brands with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and Regions Financial.
Diversification Opportunities for Primo Brands and Regions Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Primo and Regions is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and Regions Financial go up and down completely randomly.
Pair Corralation between Primo Brands and Regions Financial
Given the investment horizon of 90 days Primo Brands is expected to generate 1.36 times more return on investment than Regions Financial. However, Primo Brands is 1.36 times more volatile than Regions Financial. It trades about 0.16 of its potential returns per unit of risk. Regions Financial is currently generating about 0.05 per unit of risk. If you would invest 1,171 in Primo Brands on August 28, 2024 and sell it today you would earn a total of 1,642 from holding Primo Brands or generate 140.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primo Brands vs. Regions Financial
Performance |
| Timeline |
| Primo Brands |
| Regions Financial |
Primo Brands and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primo Brands and Regions Financial
The main advantage of trading using opposite Primo Brands and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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.| Primo Brands vs. The Coca Cola | Primo Brands vs. National Beverage Corp | Primo Brands vs. Keurig Dr Pepper | Primo Brands vs. Coca Cola Femsa SAB |
| Regions Financial vs. JBG SMITH Properties | Regions Financial vs. Where Food Comes | Regions Financial vs. Merit Medical Systems | Regions Financial vs. HNI Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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