Correlation Between CVR Energy and Regions Financial

Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and Regions Financial Corp, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Regions Financial.

Diversification Opportunities for CVR Energy and Regions Financial

-0.61

Correlation Coefficient

CVR Energy  Regions Financial

Excellent diversification

The 3 months correlation between CVR and Regions is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp and CVR Energy 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 CVR Energy 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 Corp has no effect on the direction of CVR Energy i.e., CVR Energy and Regions Financial go up and down completely randomly.

Pair Corralation between CVR Energy and Regions Financial

Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Regions Financial. In addition to that, CVR Energy is 2.69 times more volatile than Regions Financial Corp. It trades about -0.06 of its total potential returns per unit of risk. Regions Financial Corp is currently generating about 0.16 per unit of volatility. If you would invest  2,324  in Regions Financial Corp on August 31, 2024 and sell it today you would earn a total of  405.00  from holding Regions Financial Corp or generate 17.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CVR Energy  vs.  Regions Financial Corp

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Regions Financial Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Regions Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Regions Financial

The main advantage of trading using opposite CVR Energy and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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 CVR Energy and Regions Financial Corp 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.