Correlation Between Regions Financial and Union Bankshares

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

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

Diversification Opportunities for Regions Financial and Union Bankshares

0.92

Correlation Coefficient

Regions Financial  Union Bankshares

Almost no diversification

The 3 months correlation between Regions and Union is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares 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 Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of Regions Financial i.e., Regions Financial and Union Bankshares go up and down completely randomly.

Pair Corralation between Regions Financial and Union Bankshares

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.38 times less return on investment than Union Bankshares. In addition to that, Regions Financial is 1.18 times more volatile than Union Bankshares. It trades about 0.22 of its total potential returns per unit of risk. Union Bankshares is currently generating about 0.36 per unit of volatility. If you would invest  2,910  in Union Bankshares on August 31, 2024 and sell it today you would earn a total of  562.00  from holding Union Bankshares or generate 19.31% 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.  Union Bankshares

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.

Union Bankshares

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Union Bankshares are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Union Bankshares sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and Union Bankshares

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

The idea behind Regions Financial and Union Bankshares 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.