Correlation Between Regions Financial and Banco Macro

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

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

Diversification Opportunities for Regions Financial and Banco Macro

0.81

Correlation Coefficient

Regions Financial  Banco Macro

Very poor diversification

The 3 months correlation between Regions and Banco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA 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 Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Regions Financial i.e., Regions Financial and Banco Macro go up and down completely randomly.

Pair Corralation between Regions Financial and Banco Macro

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.92 times more return on investment than Banco Macro. However, Regions Financial is 1.08 times less risky than Banco Macro. It trades about 0.29 of its potential returns per unit of risk. Banco Macro SA is currently generating about 0.22 per unit of risk. If you would invest  2,339  in Regions Financial on September 3, 2024 and sell it today you would earn a total of  387.00  from holding Regions Financial or generate 16.55% return on investment over 90 days.

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

Regions Financial  vs.  Banco Macro SA

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 unfluctuating technical and fundamental indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Banco Macro SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco Macro SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Banco Macro sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and Banco Macro

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

The idea behind Regions Financial and Banco Macro SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .