Correlation Between Regions Financial and CARSALES
Can any of the company-specific risk be diversified away by investing in both Regions Financial and CARSALES 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 CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and CARSALESCOM, you can compare the effects of market volatilities on Regions Financial and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and CARSALES.
Diversification Opportunities for Regions Financial and CARSALES
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Regions and CARSALES is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Regions Financial i.e., Regions Financial and CARSALES go up and down completely randomly.
Pair Corralation between Regions Financial and CARSALES
Assuming the 90 days horizon Regions Financial is expected to generate 1.91 times more return on investment than CARSALES. However, Regions Financial is 1.91 times more volatile than CARSALESCOM. It trades about 0.25 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.38 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. CARSALESCOM
Performance |
| Timeline |
| Regions Financial |
| CARSALESCOM |
Regions Financial and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and CARSALES
The main advantage of trading using opposite Regions Financial and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Superior Plus Corp | Regions Financial vs. Origin Agritech | Regions Financial vs. Identiv |
| CARSALES vs. CNVISION MEDIA | CARSALES vs. OURGAME INTHOLDL 00005 | CARSALES vs. Playa Hotels Resorts | CARSALES vs. Universal Entertainment |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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