Correlation Between Regions Financial and Sparebanken Vest

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

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

Diversification Opportunities for Regions Financial and Sparebanken Vest

0.77

Correlation Coefficient

Regions Financial  Sparebanken Vest

Poor diversification

The 3 months correlation between Regions and Sparebanken is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial Corp and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest 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 Corp are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Regions Financial i.e., Regions Financial and Sparebanken Vest go up and down completely randomly.

Pair Corralation between Regions Financial and Sparebanken Vest

Assuming the 90 days trading horizon Regions Financial Corp is expected to generate 1.46 times more return on investment than Sparebanken Vest. However, Regions Financial is 1.46 times more volatile than Sparebanken Vest. It trades about 0.26 of its potential returns per unit of risk. Sparebanken Vest is currently generating about 0.32 per unit of risk. If you would invest  2,017  in Regions Financial Corp on April 25, 2025 and sell it today you would earn a total of  611.00  from holding Regions Financial Corp or generate 30.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.13%
Values	Daily Returns

Regions Financial Corp  vs.  Sparebanken Vest

Regions Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Regions Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sparebanken Vest

Risk-Adjusted Performance

Solid

Over the last 90 days Sparebanken Vest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Sparebanken Vest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and Sparebanken Vest

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

The idea behind Regions Financial Corp and Sparebanken Vest 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.