Correlation Between Regions Financial and Hilltop Holdings
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Hilltop Holdings 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 Hilltop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Hilltop Holdings, you can compare the effects of market volatilities on Regions Financial and Hilltop Holdings 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 Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Hilltop Holdings.
Diversification Opportunities for Regions Financial and Hilltop Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Regions and Hilltop is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop Holdings 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 Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of Regions Financial i.e., Regions Financial and Hilltop Holdings go up and down completely randomly.
Pair Corralation between Regions Financial and Hilltop Holdings
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.98 times more return on investment than Hilltop Holdings. However, Regions Financial is 1.02 times less risky than Hilltop Holdings. It trades about 0.22 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.07 per unit of risk. If you would invest 2,406 in Regions Financial on August 29, 2024 and sell it today you would earn a total of 329.00 from holding Regions Financial or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Hilltop Holdings
Performance |
| Timeline |
| Regions Financial |
| Hilltop Holdings |
Regions Financial and Hilltop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Hilltop Holdings
The main advantage of trading using opposite Regions Financial and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' long position.The idea behind Regions Financial and Hilltop Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hilltop Holdings vs. Home Federal Bancorp | Hilltop Holdings vs. First Financial Northwest | Hilltop Holdings vs. First Northwest Bancorp | Hilltop Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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