Correlation Between Spirent Communications and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Regions 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 Spirent Communications and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Regions Financial Corp, you can compare the effects of market volatilities on Spirent Communications and Regions 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 Spirent Communications with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Regions Financial.
Diversification Opportunities for Spirent Communications and Regions Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and Regions is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial Corp has no effect on the direction of Spirent Communications i.e., Spirent Communications and Regions Financial go up and down completely randomly.
Pair Corralation between Spirent Communications and Regions Financial
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.66 times more return on investment than Regions Financial. However, Spirent Communications plc is 1.52 times less risky than Regions Financial. It trades about 0.11 of its potential returns per unit of risk. Regions Financial Corp is currently generating about -0.41 per unit of risk. If you would invest 17,360 in Spirent Communications plc on September 25, 2024 and sell it today you would earn a total of 410.00 from holding Spirent Communications plc or generate 2.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Spirent Communications plc vs. Regions Financial Corp
Performance |
Timeline |
Spirent Communications |
Regions Financial Corp |
Spirent Communications and Regions Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spirent Communications and Regions Financial
The main advantage of trading using opposite Spirent Communications and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions Financial's long position.Spirent Communications vs. SMA Solar Technology | Spirent Communications vs. Roper Technologies | Spirent Communications vs. Fair Oaks Income | Spirent Communications vs. DXC Technology Co |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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