Correlation Between Regions Financial and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Cadence 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 Cadence 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 Cadence Bank, you can compare the effects of market volatilities on Regions Financial and Cadence 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 Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Cadence Bank.
Diversification Opportunities for Regions Financial and Cadence Bank
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regions and Cadence is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Regions Financial i.e., Regions Financial and Cadence Bank go up and down completely randomly.
Pair Corralation between Regions Financial and Cadence Bank
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 2.02 times more return on investment than Cadence Bank. However, Regions Financial is 2.02 times more volatile than Cadence Bank. It trades about 0.18 of its potential returns per unit of risk. Cadence Bank is currently generating about 0.01 per unit of risk. If you would invest 1,871 in Regions Financial on September 1, 2024 and sell it today you would earn a total of 855.00 from holding Regions Financial or generate 45.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Regions Financial vs. Cadence Bank
Performance |
| Timeline |
| Regions Financial |
| Cadence Bank |
Regions Financial and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Cadence Bank
The main advantage of trading using opposite Regions Financial and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Cadence 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 Cadence Bank will offset losses from the drop in Cadence 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 |
| Cadence Bank vs. Bank of Hawaii | Cadence Bank vs. Associated Banc Corp | Cadence Bank vs. Citizens Financial Group | Cadence Bank vs. CullenFrost Bankers |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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