Correlation Between Heidelberg Materials and Regions Financial

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

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

Diversification Opportunities for Heidelberg Materials and Regions Financial

-0.39

Correlation Coefficient

Heidelberg Materials  Regions Financial

Very good diversification

The 3 months correlation between Heidelberg and Regions is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Heidelberg Materials 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 Heidelberg Materials AG 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 Heidelberg Materials i.e., Heidelberg Materials and Regions Financial go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Regions Financial

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 2.52 times more return on investment than Regions Financial. However, Heidelberg Materials is 2.52 times more volatile than Regions Financial. It trades about 0.09 of its potential returns per unit of risk. Regions Financial is currently generating about -0.12 per unit of risk. If you would invest  12,200  in Heidelberg Materials AG on December 3, 2024 and sell it today you would earn a total of  2,000  from holding Heidelberg Materials AG or generate 16.39% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  Regions Financial

Heidelberg Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Regions Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Heidelberg Materials and Regions Financial

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

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.