Correlation Between Regions Financial and Lendlease

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

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

Diversification Opportunities for Regions Financial and Lendlease

-0.23

Correlation Coefficient

Regions Financial  Lendlease

Very good diversification

The 3 months correlation between Regions and Lendlease is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Regions Financial i.e., Regions Financial and Lendlease go up and down completely randomly.

Pair Corralation between Regions Financial and Lendlease

Assuming the 90 days horizon Regions Financial is expected to generate 0.65 times more return on investment than Lendlease. However, Regions Financial is 1.54 times less risky than Lendlease. It trades about -0.02 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.19 per unit of risk. If you would invest  2,436  in Regions Financial on September 20, 2024 and sell it today you would lose (16.00) from holding Regions Financial or give up 0.66% of portfolio value over 90 days.

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

Regions Financial  vs.  Lendlease Group

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.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Regions Financial and Lendlease

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

The idea behind Regions Financial and Lendlease Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..