Correlation Between REGIONS FINANCIAL and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both REGIONS FINANCIAL and BNP Paribas 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 BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGIONS FINANCIAL PFD and BNP Paribas SA, you can compare the effects of market volatilities on REGIONS FINANCIAL and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGIONS FINANCIAL and BNP Paribas.
Diversification Opportunities for REGIONS FINANCIAL and BNP Paribas
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REGIONS and BNP is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding REGIONS FINANCIAL PFD and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 PFD are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of REGIONS FINANCIAL i.e., REGIONS FINANCIAL and BNP Paribas go up and down completely randomly.
Pair Corralation between REGIONS FINANCIAL and BNP Paribas
Assuming the 90 days trading horizon REGIONS FINANCIAL PFD is expected to generate 1.02 times more return on investment than BNP Paribas. However, REGIONS FINANCIAL is 1.02 times more volatile than BNP Paribas SA. It trades about 0.07 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.5 per unit of risk. If you would invest 1,770 in REGIONS FINANCIAL PFD on August 29, 2024 and sell it today you would earn a total of 40.00 from holding REGIONS FINANCIAL PFD or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGIONS FINANCIAL PFD vs. BNP Paribas SA
Performance |
| Timeline |
| REGIONS FINANCIAL PFD |
| BNP Paribas SA |
REGIONS FINANCIAL and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGIONS FINANCIAL and BNP Paribas
The main advantage of trading using opposite REGIONS FINANCIAL and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGIONS FINANCIAL position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| REGIONS FINANCIAL vs. BNP Paribas SA | REGIONS FINANCIAL vs. Deutsche Bank Aktiengesellschaft | REGIONS FINANCIAL vs. Santander Bank Polska |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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