Correlation Between Regions Financial and Virginia National
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Virginia National 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 Virginia National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Virginia National Bankshares, you can compare the effects of market volatilities on Regions Financial and Virginia National 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 Virginia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Virginia National.
Diversification Opportunities for Regions Financial and Virginia National
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Virginia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Virginia National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virginia National 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 Virginia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virginia National has no effect on the direction of Regions Financial i.e., Regions Financial and Virginia National go up and down completely randomly.
Pair Corralation between Regions Financial and Virginia National
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.89 times less return on investment than Virginia National. But when comparing it to its historical volatility, Regions Financial is 1.41 times less risky than Virginia National. It trades about 0.12 of its potential returns per unit of risk. Virginia National Bankshares is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,476 in Virginia National Bankshares on November 9, 2024 and sell it today you would earn a total of 229.00 from holding Virginia National Bankshares or generate 6.59% 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. Virginia National Bankshares
Performance |
| Timeline |
| Regions Financial |
| Virginia National |
Regions Financial and Virginia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Virginia National
The main advantage of trading using opposite Regions Financial and Virginia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Virginia National 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 Virginia National will offset losses from the drop in Virginia National's long position.| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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