Correlation Between Regions Financial and PT Bank

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

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

Diversification Opportunities for Regions Financial and PT Bank

-0.53

Correlation Coefficient

Regions Financial  PT Bank

Excellent diversification

The 3 months correlation between Regions and PBCRF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Regions Financial i.e., Regions Financial and PT Bank go up and down completely randomly.

Pair Corralation between Regions Financial and PT Bank

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.53 times more return on investment than PT Bank. However, Regions Financial is 1.87 times less risky than PT Bank. It trades about 0.15 of its potential returns per unit of risk. PT Bank Central is currently generating about 0.02 per unit of risk. If you would invest  2,300  in Regions Financial on September 2, 2024 and sell it today you would earn a total of  426.00  from holding Regions Financial or generate 18.52% return on investment over 90 days.

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

Regions Financial  vs.  PT Bank Central

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

PT Bank Central

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Regions Financial and PT Bank

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

The idea behind Regions Financial and PT Bank Central 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.