Correlation Between Regions Financial and Tamburi Investment

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

By analyzing existing cross correlation between Regions Financial Corp and Tamburi Investment Partners, you can compare the effects of market volatilities on Regions Financial and Tamburi Investment 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 Tamburi Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Tamburi Investment.

Diversification Opportunities for Regions Financial and Tamburi Investment

-0.55

Correlation Coefficient

Regions Financial  Tamburi Investment

Excellent diversification

The 3 months correlation between Regions and Tamburi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Tamburi Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamburi Investment 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 Corp are associated (or correlated) with Tamburi Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamburi Investment has no effect on the direction of Regions Financial i.e., Regions Financial and Tamburi Investment go up and down completely randomly.

Pair Corralation between Regions Financial and Tamburi Investment

Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 1.79 times more return on investment than Tamburi Investment. However, Regions Financial is 1.79 times more volatile than Tamburi Investment Partners. It trades about 0.07 of its potential returns per unit of risk. Tamburi Investment Partners is currently generating about 0.0 per unit of risk. If you would invest  1,678  in Regions Financial Corp on October 5, 2024 and sell it today you would earn a total of  658.00  from holding Regions Financial Corp or generate 39.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Regions Financial Corp  vs.  Tamburi Investment Partners

Regions Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Regions Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tamburi Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tamburi Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Regions Financial and Tamburi Investment

The main advantage of trading using opposite Regions Financial and Tamburi Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Tamburi Investment 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 Tamburi Investment will offset losses from the drop in Tamburi Investment's long position.

The idea behind Regions Financial Corp and Tamburi Investment Partners 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.