Correlation Between OAKTRSPECLENDNEW and Regions Financial

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

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

Diversification Opportunities for OAKTRSPECLENDNEW and Regions Financial

0.64

Correlation Coefficient

OAKTRSPECLENDNEW  Regions Financial

Poor diversification

The 3 months correlation between OAKTRSPECLENDNEW and Regions is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding OAKTRSPECLENDNEW and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW i.e., OAKTRSPECLENDNEW and Regions Financial go up and down completely randomly.

Pair Corralation between OAKTRSPECLENDNEW and Regions Financial

Assuming the 90 days trading horizon OAKTRSPECLENDNEW is expected to generate 3.45 times less return on investment than Regions Financial. But when comparing it to its historical volatility, OAKTRSPECLENDNEW is 1.27 times less risky than Regions Financial. It trades about 0.05 of its potential returns per unit of risk. Regions Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Regions Financial on September 20, 2024 and sell it today you would earn a total of  360.00  from holding Regions Financial or generate 17.48% return on investment over 90 days.

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

OAKTRSPECLENDNEW  vs.  Regions Financial

OAKTRSPECLENDNEW

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OAKTRSPECLENDNEW are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, OAKTRSPECLENDNEW is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Regions Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OAKTRSPECLENDNEW and Regions Financial

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

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.