Correlation Between Regions Financial and Home BancShares
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Home 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 Home 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 Home BancShares, you can compare the effects of market volatilities on Regions Financial and Home 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 Home BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Home BancShares.
Diversification Opportunities for Regions Financial and Home BancShares
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and Home is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Home BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home 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 Home BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home BancShares has no effect on the direction of Regions Financial i.e., Regions Financial and Home BancShares go up and down completely randomly.
Pair Corralation between Regions Financial and Home BancShares
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.1 times less return on investment than Home BancShares. But when comparing it to its historical volatility, Regions Financial is 1.16 times less risky than Home BancShares. It trades about 0.21 of its potential returns per unit of risk. Home BancShares is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,689 in Home BancShares on August 24, 2024 and sell it today you would earn a total of 386.00 from holding Home BancShares or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Home BancShares
Performance |
| Timeline |
| Regions Financial |
| Home BancShares |
Regions Financial and Home BancShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Home BancShares
The main advantage of trading using opposite Regions Financial and Home BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Home 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 Home BancShares will offset losses from the drop in Home BancShares' long position.| Regions Financial vs. Banco Bradesco SA | Regions Financial vs. Itau Unibanco Banco | Regions Financial vs. Banco Santander Brasil | Regions Financial vs. Western Alliance Bancorporation |
| Home BancShares vs. Community West Bancshares | Home BancShares vs. First Financial Northwest | Home BancShares vs. First Northwest Bancorp | Home BancShares vs. First Capital |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |