Correlation Between Regions Financial and IQVIA Holdings

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

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

Diversification Opportunities for Regions Financial and IQVIA Holdings

0.9

Correlation Coefficient

Regions Financial  IQVIA Holdings

Almost no diversification

The 3 months correlation between Regions and IQVIA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings 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 IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of Regions Financial i.e., Regions Financial and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Regions Financial and IQVIA Holdings

Assuming the 90 days horizon Regions Financial is expected to generate 0.91 times more return on investment than IQVIA Holdings. However, Regions Financial is 1.1 times less risky than IQVIA Holdings. It trades about -0.08 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.12 per unit of risk. If you would invest  2,237  in Regions Financial on December 29, 2024 and sell it today you would lose (177.00) from holding Regions Financial or give up 7.91% 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.  IQVIA Holdings

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 uncertain 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.

IQVIA Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IQVIA Holdings 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 IQVIA Holdings

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

The idea behind Regions Financial and IQVIA Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.