Correlation Between Red River and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Red River and Regions Financial 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 Red River and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red River Bancshares and Regions Financial, you can compare the effects of market volatilities on Red River and Regions Financial 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 Red River with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red River and Regions Financial.
Diversification Opportunities for Red River and Regions Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Red and Regions is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Red River Bancshares and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Red River 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 Red River Bancshares are associated (or correlated) with Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Red River i.e., Red River and Regions Financial go up and down completely randomly.
Pair Corralation between Red River and Regions Financial
Given the investment horizon of 90 days Red River Bancshares is expected to generate 0.68 times more return on investment than Regions Financial. However, Red River Bancshares is 1.47 times less risky than Regions Financial. It trades about 0.37 of its potential returns per unit of risk. Regions Financial is currently generating about 0.24 per unit of risk. If you would invest 5,222 in Red River Bancshares on September 1, 2024 and sell it today you would earn a total of 783.00 from holding Red River Bancshares or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red River Bancshares vs. Regions Financial
Performance |
| Timeline |
| Red River Bancshares |
| Regions Financial |
Red River and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red River and Regions Financial
The main advantage of trading using opposite Red River and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red River position performs unexpectedly, Regions Financial 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck Bancorp |
| Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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