Correlation Between Regions Financial and Bank of America
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Verizon Communications, you can compare the effects of market volatilities on Regions Financial and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Bank of America.
Diversification Opportunities for Regions Financial and Bank of America
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Regions and Bank is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Regions Financial i.e., Regions Financial and Bank of America go up and down completely randomly.
Pair Corralation between Regions Financial and Bank of America
Assuming the 90 days horizon Regions Financial is expected to generate 2.23 times more return on investment than Bank of America. However, Regions Financial is 2.23 times more volatile than Verizon Communications. It trades about 0.25 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.26 per unit of risk. If you would invest 2,240 in Regions Financial on September 1, 2024 and sell it today you would earn a total of 340.00 from holding Regions Financial or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Verizon Communications
Performance |
| Timeline |
| Regions Financial |
| Verizon Communications |
Regions Financial and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Bank of America
The main advantage of trading using opposite Regions Financial and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Superior Plus Corp | Regions Financial vs. Origin Agritech | Regions Financial vs. Identiv |
| Bank of America vs. Regions Financial | Bank of America vs. Shin Etsu Chemical Co | Bank of America vs. Sumitomo Chemical | Bank of America vs. CHEMICAL INDUSTRIES |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |