Correlation Between ST Bancorp and Regions Financial
Can any of the company-specific risk be diversified away by investing in both ST Bancorp 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 ST Bancorp and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ST Bancorp and Regions Financial, you can compare the effects of market volatilities on ST Bancorp 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 ST Bancorp with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ST Bancorp and Regions Financial.
Diversification Opportunities for ST Bancorp and Regions Financial
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STBA and Regions is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ST Bancorp and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and ST Bancorp 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 ST Bancorp 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 ST Bancorp i.e., ST Bancorp and Regions Financial go up and down completely randomly.
Pair Corralation between ST Bancorp and Regions Financial
Given the investment horizon of 90 days ST Bancorp is expected to generate 1.08 times less return on investment than Regions Financial. In addition to that, ST Bancorp is 1.28 times more volatile than Regions Financial. It trades about 0.1 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.14 per unit of volatility. If you would invest 1,820 in Regions Financial on August 27, 2024 and sell it today you would earn a total of 908.00 from holding Regions Financial or generate 49.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ST Bancorp vs. Regions Financial
Performance |
| Timeline |
| ST Bancorp |
| Regions Financial |
ST Bancorp and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ST Bancorp and Regions Financial
The main advantage of trading using opposite ST Bancorp and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ST Bancorp 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.| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST Bancorp vs. First 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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