Correlation Between Lendlease and Regions Financial

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

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

Diversification Opportunities for Lendlease and Regions Financial

-0.17

Correlation Coefficient

Lendlease  Regions Financial

Good diversification

The 3 months correlation between Lendlease and Regions is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and Regions Financial go up and down completely randomly.

Pair Corralation between Lendlease and Regions Financial

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Regions Financial. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.23 times less risky than Regions Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Regions Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,040  in Regions Financial on September 24, 2024 and sell it today you would earn a total of  180.00  from holding Regions Financial or generate 8.82% return on investment over 90 days.

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

Lendlease Group  vs.  Regions Financial

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Lendlease and Regions Financial

The main advantage of trading using opposite Lendlease and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.