Correlation Between Regions Financial and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Preferred Bank 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 Preferred Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Preferred Bank, you can compare the effects of market volatilities on Regions Financial and Preferred Bank 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Preferred Bank.
Diversification Opportunities for Regions Financial and Preferred Bank
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and Preferred is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of Regions Financial i.e., Regions Financial and Preferred Bank go up and down completely randomly.
Pair Corralation between Regions Financial and Preferred Bank
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.78 times more return on investment than Preferred Bank. However, Regions Financial is 1.29 times less risky than Preferred Bank. It trades about 0.18 of its potential returns per unit of risk. Preferred Bank is currently generating about 0.11 per unit of risk. If you would invest 1,871 in Regions Financial on August 30, 2024 and sell it today you would earn a total of 854.00 from holding Regions Financial or generate 45.64% 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. Preferred Bank
Performance |
| Timeline |
| Regions Financial |
| Preferred Bank |
Regions Financial and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Preferred Bank
The main advantage of trading using opposite Regions Financial and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Preferred Bank 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 Preferred Bank will offset losses from the drop in Preferred Bank's long position.| Regions Financial vs. SVB T Corp | Regions Financial vs. First Capital | Regions Financial vs. Pioneer Bankcorp | Regions Financial vs. Liberty Northwest Bancorp |
| Preferred Bank vs. Pacific Premier Bancorp | Preferred Bank vs. Heritage Financial | Preferred Bank vs. QCR Holdings | Preferred Bank vs. Lakeland Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |