Correlation Between Regions Financial and NSTS Bancorp
Can any of the company-specific risk be diversified away by investing in both Regions Financial and NSTS 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 NSTS 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 NSTS Bancorp, you can compare the effects of market volatilities on Regions Financial and NSTS 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 NSTS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and NSTS Bancorp.
Diversification Opportunities for Regions Financial and NSTS Bancorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and NSTS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and NSTS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTS 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 NSTS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTS Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and NSTS Bancorp go up and down completely randomly.
Pair Corralation between Regions Financial and NSTS Bancorp
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.13 times more return on investment than NSTS Bancorp. However, Regions Financial is 1.13 times more volatile than NSTS Bancorp. It trades about 0.19 of its potential returns per unit of risk. NSTS Bancorp is currently generating about 0.08 per unit of risk. If you would invest 1,853 in Regions Financial on September 3, 2024 and sell it today you would earn a total of 873.00 from holding Regions Financial or generate 47.11% 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. NSTS Bancorp
Performance |
| Timeline |
| Regions Financial |
| NSTS Bancorp |
Regions Financial and NSTS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and NSTS Bancorp
The main advantage of trading using opposite Regions Financial and NSTS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, NSTS 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 NSTS Bancorp will offset losses from the drop in NSTS Bancorp's long position.| Regions Financial vs. JPMorgan Chase Co | Regions Financial vs. Citigroup | Regions Financial vs. Wells Fargo | Regions Financial vs. Toronto Dominion Bank |
| NSTS Bancorp vs. JPMorgan Chase Co | NSTS Bancorp vs. Citigroup | NSTS Bancorp vs. Wells Fargo | NSTS Bancorp vs. Toronto Dominion Bank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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