Correlation Between Regions Financial and Huntington Bancshares

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

By analyzing existing cross correlation between Regions Financial and Huntington Bancshares Incorporated, you can compare the effects of market volatilities on Regions Financial and Huntington Bancshares 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 Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Huntington Bancshares.

Diversification Opportunities for Regions Financial and Huntington Bancshares

0.76

Correlation Coefficient

Regions Financial  Huntington Bancshares

Poor diversification

The 3 months correlation between Regions and Huntington is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 are associated (or correlated) with Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Regions Financial i.e., Regions Financial and Huntington Bancshares go up and down completely randomly.

Pair Corralation between Regions Financial and Huntington Bancshares

Assuming the 90 days horizon Regions Financial is expected to generate 0.46 times more return on investment than Huntington Bancshares. However, Regions Financial is 2.19 times less risky than Huntington Bancshares. It trades about -0.13 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about -0.12 per unit of risk. If you would invest  2,456  in Regions Financial on October 10, 2024 and sell it today you would lose (47.00) from holding Regions Financial or give up 1.91% of portfolio value over 90 days.

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

Regions Financial  vs.  Huntington Bancshares Incorpor

Regions Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Regions Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Huntington Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Bancshares Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Regions Financial and Huntington Bancshares

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

The idea behind Regions Financial and Huntington Bancshares Incorporated 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 Transaction History module to view history of all your transactions and understand their impact on performance.