Correlation Between Regions Financial and Unity Bancorp
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Unity 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 Unity 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 Unity Bancorp, you can compare the effects of market volatilities on Regions Financial and Unity 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 Unity Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Unity Bancorp.
Diversification Opportunities for Regions Financial and Unity Bancorp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and Unity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Unity Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity 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 Unity Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and Unity Bancorp go up and down completely randomly.
Pair Corralation between Regions Financial and Unity Bancorp
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.59 times less return on investment than Unity Bancorp. But when comparing it to its historical volatility, Regions Financial is 1.03 times less risky than Unity Bancorp. It trades about 0.04 of its potential returns per unit of risk. Unity Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,706 in Unity Bancorp on August 24, 2024 and sell it today you would earn a total of 1,955 from holding Unity Bancorp or generate 72.25% 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. Unity Bancorp
Performance |
| Timeline |
| Regions Financial |
| Unity Bancorp |
Regions Financial and Unity Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Unity Bancorp
The main advantage of trading using opposite Regions Financial and Unity Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Unity 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 Unity Bancorp will offset losses from the drop in Unity Bancorp'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 |
| Unity Bancorp vs. Affinity Bancshares | Unity Bancorp vs. Home Federal Bancorp | Unity Bancorp vs. Stellar Bancorp, | Unity Bancorp vs. Meridian 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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