Correlation Between Regions Financial and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Regions Financial and First Guaranty 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 First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and First Guaranty Bancshares, you can compare the effects of market volatilities on Regions Financial and First Guaranty 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 First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and First Guaranty.
Diversification Opportunities for Regions Financial and First Guaranty
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty 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 First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Regions Financial i.e., Regions Financial and First Guaranty go up and down completely randomly.
Pair Corralation between Regions Financial and First Guaranty
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 2.09 times less return on investment than First Guaranty. In addition to that, Regions Financial is 1.2 times more volatile than First Guaranty Bancshares. It trades about 0.24 of its total potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.61 per unit of volatility. If you would invest 1,075 in First Guaranty Bancshares on September 1, 2024 and sell it today you would earn a total of 356.00 from holding First Guaranty Bancshares or generate 33.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. First Guaranty Bancshares
Performance |
| Timeline |
| Regions Financial |
| First Guaranty Bancshares |
Regions Financial and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and First Guaranty
The main advantage of trading using opposite Regions Financial and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
| First Guaranty vs. Community West Bancshares | First Guaranty vs. First Northwest Bancorp | First Guaranty vs. First Financial Northwest | First Guaranty 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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