Correlation Between Regions Financial and National Bank
Can any of the company-specific risk be diversified away by investing in both Regions Financial and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and National Bank Holdings, you can compare the effects of market volatilities on Regions Financial and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and National Bank.
Diversification Opportunities for Regions Financial and National Bank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and National is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Regions Financial i.e., Regions Financial and National Bank go up and down completely randomly.
Pair Corralation between Regions Financial and National Bank
Assuming the 90 days horizon Regions Financial is expected to generate 1.14 times less return on investment than National Bank. But when comparing it to its historical volatility, Regions Financial is 1.08 times less risky than National Bank. It trades about 0.08 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,567 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 1,913 from holding National Bank Holdings or generate 74.52% 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. National Bank Holdings
Performance |
| Timeline |
| Regions Financial |
| National Bank Holdings |
Regions Financial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and National Bank
The main advantage of trading using opposite Regions Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Regions Financial vs. Mitsui Chemicals | Regions Financial vs. SIDETRADE EO 1 | Regions Financial vs. Globe Trade Centre | Regions Financial vs. Vastned Retail NV |
| National Bank vs. Superior Plus Corp | National Bank vs. NMI Holdings | National Bank vs. Origin Agritech | National Bank vs. SIVERS SEMICONDUCTORS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |