Correlation Between Lindsell Train and Regions Financial

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

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

Diversification Opportunities for Lindsell Train and Regions Financial

-0.59

Correlation Coefficient

Lindsell Train  Regions Financial

Excellent diversification

The 3 months correlation between Lindsell and Regions is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp and Lindsell Train 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 Lindsell Train Investment 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 Corp has no effect on the direction of Lindsell Train i.e., Lindsell Train and Regions Financial go up and down completely randomly.

Pair Corralation between Lindsell Train and Regions Financial

Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 0.83 times more return on investment than Regions Financial. However, Lindsell Train Investment is 1.2 times less risky than Regions Financial. It trades about 0.2 of its potential returns per unit of risk. Regions Financial Corp is currently generating about 0.06 per unit of risk. If you would invest  78,700  in Lindsell Train Investment on October 23, 2024 and sell it today you would earn a total of  3,600  from holding Lindsell Train Investment or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Lindsell Train Investment  vs.  Regions Financial Corp

Lindsell Train Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lindsell Train may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Lindsell Train and Regions Financial

The main advantage of trading using opposite Lindsell Train and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train 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 Lindsell Train Investment and Regions Financial Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.