Correlation Between ALIOR BANK and Regions Financial

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

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

Diversification Opportunities for ALIOR BANK and Regions Financial

-0.28

Correlation Coefficient

ALIOR BANK  Regions Financial

Very good diversification

The 3 months correlation between ALIOR and Regions is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ALIOR BANK and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and ALIOR BANK 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 ALIOR BANK 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 ALIOR BANK i.e., ALIOR BANK and Regions Financial go up and down completely randomly.

Pair Corralation between ALIOR BANK and Regions Financial

Assuming the 90 days trading horizon ALIOR BANK is expected to generate 1.27 times more return on investment than Regions Financial. However, ALIOR BANK is 1.27 times more volatile than Regions Financial. It trades about 0.11 of its potential returns per unit of risk. Regions Financial is currently generating about 0.04 per unit of risk. If you would invest  578.00  in ALIOR BANK on September 20, 2024 and sell it today you would earn a total of  1,462  from holding ALIOR BANK or generate 252.94% return on investment over 90 days.

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

ALIOR BANK  vs.  Regions Financial

ALIOR BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALIOR BANK 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Regions Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALIOR BANK and Regions Financial

The main advantage of trading using opposite ALIOR BANK and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALIOR BANK 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 ALIOR BANK 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 CEOs Directory module to screen CEOs from public companies around the world.