Correlation Between Regions Financial and Hilltop Holdings
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Hilltop Holdings 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 Hilltop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Hilltop Holdings, you can compare the effects of market volatilities on Regions Financial and Hilltop Holdings 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 Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Hilltop Holdings.
Diversification Opportunities for Regions Financial and Hilltop Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regions and Hilltop is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop 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 Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of Regions Financial i.e., Regions Financial and Hilltop Holdings go up and down completely randomly.
Pair Corralation between Regions Financial and Hilltop Holdings
Assuming the 90 days horizon Regions Financial is expected to generate 1.04 times more return on investment than Hilltop Holdings. However, Regions Financial is 1.04 times more volatile than Hilltop Holdings. It trades about 0.04 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.02 per unit of risk. If you would invest 1,917 in Regions Financial on September 3, 2024 and sell it today you would earn a total of 683.00 from holding Regions Financial or generate 35.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Hilltop Holdings
Performance |
| Timeline |
| Regions Financial |
| Hilltop Holdings |
Regions Financial and Hilltop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Hilltop Holdings
The main advantage of trading using opposite Regions Financial and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' long position.| Regions Financial vs. Perma Fix Environmental Services | Regions Financial vs. ALGOMA STEEL GROUP | Regions Financial vs. USU Software AG | Regions Financial vs. Steel Dynamics |
| Hilltop Holdings vs. Taylor Morrison Home | Hilltop Holdings vs. Addus HomeCare | Hilltop Holdings vs. Gold Road Resources | Hilltop Holdings vs. DFS Furniture PLC |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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