Correlation Between Regions Financial and Amalgamated Bank

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

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

Diversification Opportunities for Regions Financial and Amalgamated Bank

0.93

Correlation Coefficient

Regions Financial  Amalgamated Bank

Almost no diversification

The 3 months correlation between Regions and Amalgamated is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank 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 Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of Regions Financial i.e., Regions Financial and Amalgamated Bank go up and down completely randomly.

Pair Corralation between Regions Financial and Amalgamated Bank

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.68 times more return on investment than Amalgamated Bank. However, Regions Financial is 1.48 times less risky than Amalgamated Bank. It trades about -0.07 of its potential returns per unit of risk. Amalgamated Bank is currently generating about -0.09 per unit of risk. If you would invest  2,341  in Regions Financial on December 29, 2024 and sell it today you would lose (148.00) from holding Regions Financial or give up 6.32% of portfolio value over 90 days.

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

Regions Financial  vs.  Amalgamated Bank

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 nearly stable technical and fundamental indicators, Regions Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amalgamated Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amalgamated Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Regions Financial and Amalgamated Bank

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

The idea behind Regions Financial and Amalgamated Bank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.