Correlation Between Regions Financial and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Tectonic Financial 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 Tectonic Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Tectonic Financial PR, you can compare the effects of market volatilities on Regions Financial and Tectonic Financial 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Tectonic Financial.
Diversification Opportunities for Regions Financial and Tectonic Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and Tectonic is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Financial 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of Regions Financial i.e., Regions Financial and Tectonic Financial go up and down completely randomly.
Pair Corralation between Regions Financial and Tectonic Financial
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.64 times more return on investment than Tectonic Financial. However, Regions Financial is 1.64 times more volatile than Tectonic Financial PR. It trades about 0.03 of its potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.04 per unit of risk. If you would invest 2,109 in Regions Financial on August 23, 2024 and sell it today you would earn a total of 565.00 from holding Regions Financial or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Tectonic Financial PR
Performance |
| Timeline |
| Regions Financial |
| Tectonic Financial |
Regions Financial and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Tectonic Financial
The main advantage of trading using opposite Regions Financial and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Tectonic Financial 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 Tectonic Financial will offset losses from the drop in Tectonic Financial's long position.| Regions Financial vs. Waterstone Financial | Regions Financial vs. Mid Penn Bancorp | Regions Financial vs. ST Bancorp | Regions Financial vs. Republic Bancorp |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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