Correlation Between Regions Financial and Aflac Incorporated
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Aflac Incorporated 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 Aflac Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Aflac Incorporated, you can compare the effects of market volatilities on Regions Financial and Aflac Incorporated 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 Aflac Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Aflac Incorporated.
Diversification Opportunities for Regions Financial and Aflac Incorporated
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Aflac is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Aflac Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aflac Incorporated 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 Aflac Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aflac Incorporated has no effect on the direction of Regions Financial i.e., Regions Financial and Aflac Incorporated go up and down completely randomly.
Pair Corralation between Regions Financial and Aflac Incorporated
Assuming the 90 days horizon Regions Financial is expected to generate 0.94 times more return on investment than Aflac Incorporated. However, Regions Financial is 1.07 times less risky than Aflac Incorporated. It trades about -0.02 of its potential returns per unit of risk. Aflac Incorporated is currently generating about -0.15 per unit of risk. If you would invest 2,436 in Regions Financial on September 13, 2024 and sell it today you would lose (16.00) from holding Regions Financial or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Aflac Incorporated
Performance |
| Timeline |
| Regions Financial |
| Aflac Incorporated |
Regions Financial and Aflac Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Aflac Incorporated
The main advantage of trading using opposite Regions Financial and Aflac Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Aflac Incorporated 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 Aflac Incorporated will offset losses from the drop in Aflac Incorporated's long position.| Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Superior Plus Corp | Regions Financial vs. SIVERS SEMICONDUCTORS AB | Regions Financial vs. CHINA HUARONG ENERHD 50 |
| Aflac Incorporated vs. CENTURIA OFFICE REIT | Aflac Incorporated vs. Warner Music Group | Aflac Incorporated vs. WisdomTree Investments | Aflac Incorporated vs. Corporate Office Properties |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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