Correlation Between VIRG NATL and Regions Financial

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

Diversification Opportunities for VIRG NATL and Regions Financial

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between VIRG and Regions is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and VIRG NATL 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 VIRG NATL BANKSH 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 VIRG NATL i.e., VIRG NATL and Regions Financial go up and down completely randomly.

Pair Corralation between VIRG NATL and Regions Financial

Assuming the 90 days horizon VIRG NATL is expected to generate 1.94 times less return on investment than Regions Financial. In addition to that, VIRG NATL is 1.65 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  1,526  in Regions Financial on October 5, 2024 and sell it today you would earn a total of  734.00  from holding Regions Financial or generate 48.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

VIRG NATL BANKSH  vs.  Regions Financial

 Performance 
       Timeline  
VIRG NATL BANKSH 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Modest
Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Regions Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VIRG NATL and Regions Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIRG NATL and Regions Financial

The main advantage of trading using opposite VIRG NATL and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIRG NATL 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 VIRG NATL BANKSH 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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