Correlation Between Regions Financial and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Regions Financial and ELECTRONIC ARTS 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 ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and ELECTRONIC ARTS, you can compare the effects of market volatilities on Regions Financial and ELECTRONIC ARTS 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 ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and ELECTRONIC ARTS.
Diversification Opportunities for Regions Financial and ELECTRONIC ARTS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and ELECTRONIC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS 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 ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of Regions Financial i.e., Regions Financial and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Regions Financial and ELECTRONIC ARTS
Assuming the 90 days horizon Regions Financial is expected to generate 1.4 times more return on investment than ELECTRONIC ARTS. However, Regions Financial is 1.4 times more volatile than ELECTRONIC ARTS. It trades about 0.19 of its potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.15 per unit of risk. If you would invest 1,709 in Regions Financial on September 2, 2024 and sell it today you would earn a total of 891.00 from holding Regions Financial or generate 52.14% 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. ELECTRONIC ARTS
Performance |
| Timeline |
| Regions Financial |
| ELECTRONIC ARTS |
Regions Financial and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and ELECTRONIC ARTS
The main advantage of trading using opposite Regions Financial and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| Regions Financial vs. DELTA AIR LINES | Regions Financial vs. SAFETY MEDICAL PROD | Regions Financial vs. Pentair plc | Regions Financial vs. Alaska Air Group |
| ELECTRONIC ARTS vs. PTT Global Chemical | ELECTRONIC ARTS vs. Eastman Chemical | ELECTRONIC ARTS vs. NISSAN CHEMICAL IND | ELECTRONIC ARTS vs. Silicon Motion Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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