Correlation Between Regions Financial and United Utilities
Can any of the company-specific risk be diversified away by investing in both Regions Financial and United Utilities 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 United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and United Utilities Group, you can compare the effects of market volatilities on Regions Financial and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and United Utilities.
Diversification Opportunities for Regions Financial and United Utilities
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Regions Financial i.e., Regions Financial and United Utilities go up and down completely randomly.
Pair Corralation between Regions Financial and United Utilities
Assuming the 90 days horizon Regions Financial is expected to under-perform the United Utilities. In addition to that, Regions Financial is 1.35 times more volatile than United Utilities Group. It trades about -0.36 of its total potential returns per unit of risk. United Utilities Group is currently generating about -0.31 per unit of volatility. If you would invest 1,362 in United Utilities Group on September 26, 2024 and sell it today you would lose (102.00) from holding United Utilities Group or give up 7.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. United Utilities Group
Performance |
| Timeline |
| Regions Financial |
| United Utilities |
Regions Financial and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and United Utilities
The main advantage of trading using opposite Regions Financial and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Regions Financial vs. The PNC Financial | Regions Financial vs. MT Bank Corp | Regions Financial vs. Citizens Financial Group |
| United Utilities vs. American Water Works | United Utilities vs. Aqua America | United Utilities vs. Companhia de Saneamento | United Utilities vs. Guangdong Investment Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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