Correlation Between Washington Federal and Regions Financial

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Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Regions Financial, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Regions Financial.

Diversification Opportunities for Washington Federal and Regions Financial

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Washington and Regions is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and Regions Financial go up and down completely randomly.

Pair Corralation between Washington Federal and Regions Financial

Assuming the 90 days horizon Washington Federal is expected to generate 1.17 times less return on investment than Regions Financial. In addition to that, Washington Federal is 1.41 times more volatile than Regions Financial. It trades about 0.04 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.07 per unit of volatility. If you would invest  1,837  in Regions Financial on September 5, 2024 and sell it today you would earn a total of  76.00  from holding Regions Financial or generate 4.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Washington Federal  vs.  Regions Financial

 Performance 
       Timeline  
Washington Federal 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Washington Federal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Washington Federal 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

5 of 100

 
Weak
 
Strong
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. In spite of rather sound basic indicators, Regions Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Washington Federal and Regions Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Washington Federal and Regions Financial

The main advantage of trading using opposite Washington Federal and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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 Washington Federal 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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