Correlation Between Regions Financial and Woori Financial

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

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

Diversification Opportunities for Regions Financial and Woori Financial

0.83

Correlation Coefficient

Regions Financial  Woori Financial

Very poor diversification

The 3 months correlation between Regions and Woori is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Regions Financial i.e., Regions Financial and Woori Financial go up and down completely randomly.

Pair Corralation between Regions Financial and Woori Financial

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.72 times more return on investment than Woori Financial. However, Regions Financial is 1.4 times less risky than Woori Financial. It trades about 0.22 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.12 per unit of risk. If you would invest  1,799  in Regions Financial on June 9, 2024 and sell it today you would earn a total of  418.00  from holding Regions Financial or generate 23.24% return on investment over 90 days.

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

Regions Financial  vs.  Woori Financial Group

Regions Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 17 (%) 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.

Woori Financial Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woori Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Woori Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and Woori Financial

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

The idea behind Regions Financial and Woori Financial 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.

Check out your portfolio center.

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.