Correlation Between Regions Financial and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Bridgewater Bancshares 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 Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Bridgewater Bancshares, you can compare the effects of market volatilities on Regions Financial and Bridgewater Bancshares 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 Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Bridgewater Bancshares.
Diversification Opportunities for Regions Financial and Bridgewater Bancshares
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Bridgewater is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Bridgewater Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares 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 Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of Regions Financial i.e., Regions Financial and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between Regions Financial and Bridgewater Bancshares
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.82 times more return on investment than Bridgewater Bancshares. However, Regions Financial is 1.22 times less risky than Bridgewater Bancshares. It trades about 0.11 of its potential returns per unit of risk. Bridgewater Bancshares is currently generating about 0.06 per unit of risk. If you would invest 1,669 in Regions Financial on September 4, 2024 and sell it today you would earn a total of 965.00 from holding Regions Financial or generate 57.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Bridgewater Bancshares
Performance |
| Timeline |
| Regions Financial |
| Bridgewater Bancshares |
Regions Financial and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Bridgewater Bancshares
The main advantage of trading using opposite Regions Financial and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
| Bridgewater Bancshares vs. International Bancshares | Bridgewater Bancshares vs. Finward Bancorp | Bridgewater Bancshares vs. Aquagold International | Bridgewater Bancshares vs. Thrivent High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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