Correlation Between Regions Financial and Towne Bank
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Towne 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 Towne 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 Towne Bank, you can compare the effects of market volatilities on Regions Financial and Towne 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 Towne Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Towne Bank.
Diversification Opportunities for Regions Financial and Towne Bank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Towne is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Towne Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towne 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 Towne Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towne Bank has no effect on the direction of Regions Financial i.e., Regions Financial and Towne Bank go up and down completely randomly.
Pair Corralation between Regions Financial and Towne Bank
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.92 times more return on investment than Towne Bank. However, Regions Financial is 1.08 times less risky than Towne Bank. It trades about 0.14 of its potential returns per unit of risk. Towne Bank is currently generating about 0.1 per unit of risk. If you would invest 1,820 in Regions Financial on August 27, 2024 and sell it today you would earn a total of 908.00 from holding Regions Financial or generate 49.89% 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. Towne Bank
Performance |
| Timeline |
| Regions Financial |
| Towne Bank |
Regions Financial and Towne Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Towne Bank
The main advantage of trading using opposite Regions Financial and Towne Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Towne 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 Towne Bank will offset losses from the drop in Towne Bank's long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
| Towne Bank vs. Penns Woods Bancorp | Towne Bank vs. 1st Source | Towne Bank vs. Great Southern Bancorp | Towne Bank vs. Waterstone 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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