Correlation Between Regions Financial and Vanguard Funds

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

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

Diversification Opportunities for Regions Financial and Vanguard Funds

0.94

Correlation Coefficient

Regions Financial  Vanguard Funds

Almost no diversification

The 3 months correlation between Regions and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Regions Financial i.e., Regions Financial and Vanguard Funds go up and down completely randomly.

Pair Corralation between Regions Financial and Vanguard Funds

Assuming the 90 days horizon Regions Financial is expected to generate 2.21 times more return on investment than Vanguard Funds. However, Regions Financial is 2.21 times more volatile than Vanguard Funds Public. It trades about 0.15 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about 0.22 per unit of risk. If you would invest  2,001  in Regions Financial on September 19, 2024 and sell it today you would earn a total of  379.00  from holding Regions Financial or generate 18.94% return on investment over 90 days.

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

Regions Financial  vs.  Vanguard Funds Public

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.

Vanguard Funds Public

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vanguard Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Regions Financial and Vanguard Funds

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

The idea behind Regions Financial and Vanguard Funds Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.