Correlation Between Regions Financial and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Regions Financial and Home Bancorp 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 Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and Home Bancorp, you can compare the effects of market volatilities on Regions Financial and Home Bancorp 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 Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Home Bancorp.
Diversification Opportunities for Regions Financial and Home Bancorp
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Regions and Home is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp 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 Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Regions Financial i.e., Regions Financial and Home Bancorp go up and down completely randomly.
Pair Corralation between Regions Financial and Home Bancorp
Allowing for the 90-day total investment horizon Regions Financial is expected to under-perform the Home Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Regions Financial is 1.47 times less risky than Home Bancorp. The stock trades about -0.13 of its potential returns per unit of risk. The Home Bancorp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,683 in Home Bancorp on January 31, 2024 and sell it today you would lose (126.00) from holding Home Bancorp or give up 3.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Regions Financial vs. Home Bancorp
Performance |
Timeline |
Regions Financial |
Home Bancorp |
Regions Financial and Home Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Regions Financial and Home Bancorp
The main advantage of trading using opposite Regions Financial and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, Home Bancorp 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 Home Bancorp will offset losses from the drop in Home Bancorp's long position.Regions Financial vs. KeyCorp | Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. New York Community | Regions Financial vs. Zions Bancorporation |
Home Bancorp vs. National Bank Holdings | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. Financial Institutions | Home Bancorp vs. Heritage Financial |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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