Correlation Between Regions Financial and Valley National
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Valley National 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 Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Valley National Bancorp, you can compare the effects of market volatilities on Regions Financial and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Valley National.
Diversification Opportunities for Regions Financial and Valley National
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Regions and Valley is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and Valley National go up and down completely randomly.
Pair Corralation between Regions Financial and Valley National
Assuming the 90 days horizon Regions Financial is expected to generate 3.95 times more return on investment than Valley National. However, Regions Financial is 3.95 times more volatile than Valley National Bancorp. It trades about 0.11 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.13 per unit of risk. If you would invest 1,682 in Regions Financial on December 11, 2024 and sell it today you would earn a total of 71.00 from holding Regions Financial or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Regions Financial vs. Valley National Bancorp
Performance |
| Timeline |
| Regions Financial |
| Valley National Bancorp |
Regions Financial and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Valley National
The main advantage of trading using opposite Regions Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National's long position.| Regions Financial vs. Life Time Group | ||
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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