Correlation Between Regions Financial and Amalgamated Bank
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Amalgamated Bank 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 Amalgamated Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Amalgamated Bank, you can compare the effects of market volatilities on Regions Financial and Amalgamated Bank 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 Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Amalgamated Bank.
Diversification Opportunities for Regions Financial and Amalgamated Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Amalgamated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank 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 Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of Regions Financial i.e., Regions Financial and Amalgamated Bank go up and down completely randomly.
Pair Corralation between Regions Financial and Amalgamated Bank
Allowing for the 90-day total investment horizon Regions Financial is expected to under-perform the Amalgamated Bank. But the stock apears to be less risky and, when comparing its historical volatility, Regions Financial is 1.9 times less risky than Amalgamated Bank. The stock trades about -0.22 of its potential returns per unit of risk. The Amalgamated Bank is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,403 in Amalgamated Bank on November 27, 2024 and sell it today you would lose (203.00) from holding Amalgamated Bank or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Amalgamated Bank
Performance |
| Timeline |
| Regions Financial |
| Amalgamated Bank |
Regions Financial and Amalgamated Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Amalgamated Bank
The main advantage of trading using opposite Regions Financial and Amalgamated Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Amalgamated Bank 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 Amalgamated Bank will offset losses from the drop in Amalgamated Bank's long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
| Amalgamated Bank vs. Home Bancorp | Amalgamated Bank vs. Community West Bancshares | Amalgamated Bank vs. First Community | Amalgamated Bank vs. Great Southern Bancorp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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