Correlation Between Regions Financial and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both Regions Financial and ESSA Bancorp 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 ESSA Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and ESSA Bancorp, you can compare the effects of market volatilities on Regions Financial and ESSA Bancorp 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and ESSA Bancorp.
Diversification Opportunities for Regions Financial and ESSA Bancorp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and ESSA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and ESSA Bancorp go up and down completely randomly.
Pair Corralation between Regions Financial and ESSA Bancorp
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.52 times less return on investment than ESSA Bancorp. In addition to that, Regions Financial is 1.01 times more volatile than ESSA Bancorp. It trades about 0.21 of its total potential returns per unit of risk. ESSA Bancorp is currently generating about 0.32 per unit of volatility. If you would invest 1,914 in ESSA Bancorp on November 3, 2024 and sell it today you would earn a total of 177.00 from holding ESSA Bancorp or generate 9.25% 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. ESSA Bancorp
Performance |
| Timeline |
| Regions Financial |
| ESSA Bancorp |
Regions Financial and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and ESSA Bancorp
The main advantage of trading using opposite Regions Financial and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, ESSA Bancorp 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated | Regions Financial vs. Comerica |
| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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