Correlation Between Regions Financial and TIMBERCREEK FINL

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

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

Diversification Opportunities for Regions Financial and TIMBERCREEK FINL

-0.2

Correlation Coefficient

Regions Financial  TIMBERCREEK FINL

Good diversification

The 3 months correlation between Regions and TIMBERCREEK is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and TIMBERCREEK FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIMBERCREEK FINL 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 TIMBERCREEK FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIMBERCREEK FINL has no effect on the direction of Regions Financial i.e., Regions Financial and TIMBERCREEK FINL go up and down completely randomly.

Pair Corralation between Regions Financial and TIMBERCREEK FINL

Assuming the 90 days horizon Regions Financial is expected to generate 0.9 times more return on investment than TIMBERCREEK FINL. However, Regions Financial is 1.11 times less risky than TIMBERCREEK FINL. It trades about 0.04 of its potential returns per unit of risk. TIMBERCREEK FINL is currently generating about -0.1 per unit of risk. If you would invest  2,159  in Regions Financial on September 24, 2024 and sell it today you would earn a total of  61.00  from holding Regions Financial or generate 2.83% return on investment over 90 days.

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

Regions Financial  vs.  TIMBERCREEK FINL

Regions Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regions Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TIMBERCREEK FINL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIMBERCREEK FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 Regions Financial and TIMBERCREEK FINL

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

The idea behind Regions Financial and TIMBERCREEK FINL 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.