Correlation Between Regions Financial and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Texas Capital 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 Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Texas Capital Bancshares, you can compare the effects of market volatilities on Regions Financial and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Texas Capital.
Diversification Opportunities for Regions Financial and Texas Capital
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and Texas is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Regions Financial i.e., Regions Financial and Texas Capital go up and down completely randomly.
Pair Corralation between Regions Financial and Texas Capital
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.96 times more return on investment than Texas Capital. However, Regions Financial is 1.04 times less risky than Texas Capital. It trades about 0.21 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.16 per unit of risk. If you would invest 2,364 in Regions Financial on August 24, 2024 and sell it today you would earn a total of 310.00 from holding Regions Financial or generate 13.11% 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. Texas Capital Bancshares
Performance |
| Timeline |
| Regions Financial |
| Texas Capital Bancshares |
Regions Financial and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Texas Capital
The main advantage of trading using opposite Regions Financial and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's 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 |
| Texas Capital vs. Heartland Financial USA | Texas Capital vs. Heritage Commerce Corp | Texas Capital vs. Business First Bancshares | Texas Capital vs. German American 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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