Correlation Between Truist Financial and Regions Financial

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

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

Diversification Opportunities for Truist Financial and Regions Financial

0.11

Correlation Coefficient

Truist Financial  Regions Financial

Average diversification

The 3 months correlation between Truist and Regions is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Truist 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 Truist Financial 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 has no effect on the direction of Truist Financial i.e., Truist Financial and Regions Financial go up and down completely randomly.

Pair Corralation between Truist Financial and Regions Financial

Assuming the 90 days trading horizon Truist Financial is expected to generate 0.71 times more return on investment than Regions Financial. However, Truist Financial is 1.42 times less risky than Regions Financial. It trades about 0.07 of its potential returns per unit of risk. Regions Financial is currently generating about -0.09 per unit of risk. If you would invest  1,884  in Truist Financial on December 29, 2024 and sell it today you would earn a total of  73.00  from holding Truist Financial or generate 3.87% return on investment over 90 days.

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

Truist Financial  vs.  Regions Financial

Truist Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Truist Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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 weak performance, the Stock's technical and fundamental 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 Truist Financial and Regions Financial

The main advantage of trading using opposite Truist Financial and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial 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 Truist Financial and Regions Financial 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.