Correlation Between Regions Financial and VeriSign

Can any of the company-specific risk be diversified away by investing in both Regions Financial and VeriSign 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 VeriSign 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 VeriSign, you can compare the effects of market volatilities on Regions Financial and VeriSign 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 VeriSign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and VeriSign.

Diversification Opportunities for Regions Financial and VeriSign

-0.42

Correlation Coefficient

Regions Financial  VeriSign

Very good diversification

The 3 months correlation between Regions and VeriSign is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Regions Financial i.e., Regions Financial and VeriSign go up and down completely randomly.

Pair Corralation between Regions Financial and VeriSign

Assuming the 90 days trading horizon Regions Financial is expected to generate 2.5 times less return on investment than VeriSign. In addition to that, Regions Financial is 1.71 times more volatile than VeriSign. It trades about 0.09 of its total potential returns per unit of risk. VeriSign is currently generating about 0.37 per unit of volatility. If you would invest  19,911  in VeriSign on October 22, 2024 and sell it today you would earn a total of  1,145  from holding VeriSign or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.47%
Values	Daily Returns

Regions Financial Corp  vs.  VeriSign

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

VeriSign

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VeriSign unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and VeriSign

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

The idea behind Regions Financial Corp and VeriSign 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.