Correlation Between Regions Financial and BROOKFIELD CORP

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Can any of the company-specific risk be diversified away by investing in both Regions Financial and BROOKFIELD CORP 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 BROOKFIELD CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and BROOKFIELD P CLA, you can compare the effects of market volatilities on Regions Financial and BROOKFIELD CORP 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 BROOKFIELD CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and BROOKFIELD CORP.

Diversification Opportunities for Regions Financial and BROOKFIELD CORP

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Regions and BROOKFIELD is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and BROOKFIELD P CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFIELD P CLA 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 BROOKFIELD CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFIELD P CLA has no effect on the direction of Regions Financial i.e., Regions Financial and BROOKFIELD CORP go up and down completely randomly.

Pair Corralation between Regions Financial and BROOKFIELD CORP

Assuming the 90 days horizon Regions Financial is expected to generate 0.95 times more return on investment than BROOKFIELD CORP. However, Regions Financial is 1.05 times less risky than BROOKFIELD CORP. It trades about 0.35 of its potential returns per unit of risk. BROOKFIELD P CLA is currently generating about 0.31 per unit of risk. If you would invest  2,160  in Regions Financial on September 4, 2024 and sell it today you would earn a total of  440.00  from holding Regions Financial or generate 20.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Regions Financial  vs.  BROOKFIELD P CLA

 Performance 
       Timeline  
Regions Financial 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.
BROOKFIELD P CLA 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BROOKFIELD P CLA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BROOKFIELD CORP reported solid returns over the last few months and may actually be approaching a breakup point.

Regions Financial and BROOKFIELD CORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Regions Financial and BROOKFIELD CORP

The main advantage of trading using opposite Regions Financial and BROOKFIELD CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, BROOKFIELD CORP 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 BROOKFIELD CORP will offset losses from the drop in BROOKFIELD CORP's long position.
The idea behind Regions Financial and BROOKFIELD P CLA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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