Correlation Between Regions Financial and Capital One
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Capital One 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 Regions Financial and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Capital One Financial, you can compare the effects of market volatilities on Regions Financial and Capital One 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 Regions Financial with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Capital One.
Diversification Opportunities for Regions Financial and Capital One
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Regions and Capital is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial and Regions Financial 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 Regions Financial are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Regions Financial i.e., Regions Financial and Capital One go up and down completely randomly.
Pair Corralation between Regions Financial and Capital One
Assuming the 90 days horizon Regions Financial is expected to generate 0.59 times more return on investment than Capital One. However, Regions Financial is 1.7 times less risky than Capital One. It trades about 0.06 of its potential returns per unit of risk. Capital One Financial is currently generating about -0.04 per unit of risk. If you would invest 2,465 in Regions Financial on August 27, 2024 and sell it today you would earn a total of 19.00 from holding Regions Financial or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Capital One Financial
Performance |
| Timeline |
| Regions Financial |
| Capital One Financial |
Regions Financial and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Capital One
The main advantage of trading using opposite Regions Financial and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Regions Financial vs. Capital One Financial | Regions Financial vs. Capital One Financial | Regions Financial vs. Bank of America |
| Capital One vs. Capital One Financial | Capital One vs. Bank of America | Capital One vs. Wells Fargo | Capital One vs. Bank of America |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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