Correlation Between Regions Financial and Lundin Mining

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

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

Diversification Opportunities for Regions Financial and Lundin Mining

-0.04

Correlation Coefficient

Regions Financial  Lundin Mining

Good diversification

The 3 months correlation between Regions and Lundin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Lundin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining has no effect on the direction of Regions Financial i.e., Regions Financial and Lundin Mining go up and down completely randomly.

Pair Corralation between Regions Financial and Lundin Mining

Assuming the 90 days horizon Regions Financial is expected to generate 0.84 times more return on investment than Lundin Mining. However, Regions Financial is 1.19 times less risky than Lundin Mining. It trades about 0.1 of its potential returns per unit of risk. Lundin Mining is currently generating about -0.07 per unit of risk. If you would invest  2,020  in Regions Financial on September 27, 2024 and sell it today you would earn a total of  260.00  from holding Regions Financial or generate 12.87% return on investment over 90 days.

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

Regions Financial  vs.  Lundin Mining

Regions Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 8 (%) 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.

Lundin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lundin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Regions Financial and Lundin Mining

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

The idea behind Regions Financial and Lundin Mining 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.