Correlation Between Virginia National and Regions Financial

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Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Regions Financial, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Regions Financial.

Diversification Opportunities for Virginia National and Regions Financial

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Virginia and Regions is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and Regions Financial go up and down completely randomly.

Pair Corralation between Virginia National and Regions Financial

Given the investment horizon of 90 days Virginia National is expected to generate 1.91 times less return on investment than Regions Financial. In addition to that, Virginia National is 1.41 times more volatile than Regions Financial. It trades about 0.03 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.09 per unit of volatility. If you would invest  1,715  in Regions Financial on November 9, 2024 and sell it today you would earn a total of  749.00  from holding Regions Financial or generate 43.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Virginia National Bankshares  vs.  Regions Financial

 Performance 
       Timeline  
Virginia National 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Virginia National Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Regions Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Regions Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Virginia National and Regions Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Virginia National and Regions Financial

The main advantage of trading using opposite Virginia National and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.
The idea behind Virginia National Bankshares and Regions Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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