Correlation Between Regions Financial and Mid Southern
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Mid Southern 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 Mid Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Mid Southern Bancorp, you can compare the effects of market volatilities on Regions Financial and Mid Southern 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 Mid Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Mid Southern.
Diversification Opportunities for Regions Financial and Mid Southern
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Mid is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Mid Southern Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Southern 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 Mid Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Southern Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and Mid Southern go up and down completely randomly.
Pair Corralation between Regions Financial and Mid Southern
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.79 times more return on investment than Mid Southern. However, Regions Financial is 1.26 times less risky than Mid Southern. It trades about 0.04 of its potential returns per unit of risk. Mid Southern Bancorp is currently generating about 0.01 per unit of risk. If you would invest 1,990 in Regions Financial on September 3, 2024 and sell it today you would earn a total of 736.00 from holding Regions Financial or generate 36.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.71% |
| Values | Daily Returns |
Regions Financial vs. Mid Southern Bancorp
Performance |
| Timeline |
| Regions Financial |
| Mid Southern Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Regions Financial and Mid Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Mid Southern
The main advantage of trading using opposite Regions Financial and Mid Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Mid Southern 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 Mid Southern will offset losses from the drop in Mid Southern's long position.| Regions Financial vs. JPMorgan Chase Co | Regions Financial vs. Citigroup | Regions Financial vs. Wells Fargo | Regions Financial vs. Toronto Dominion Bank |
| Mid Southern vs. Community West Bancshares | Mid Southern vs. First Financial Northwest | Mid Southern vs. CF Bankshares | Mid Southern vs. Home Federal 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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