Correlation Between Regions Financial and Eagle Bancorp

Can any of the company-specific risk be diversified away by investing in both Regions Financial and Eagle 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 Eagle 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 Eagle Bancorp Montana, you can compare the effects of market volatilities on Regions Financial and Eagle 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Eagle Bancorp.

Diversification Opportunities for Regions Financial and Eagle Bancorp

-0.17

Correlation Coefficient

Regions Financial  Eagle Bancorp

Good diversification

The 3 months correlation between Regions and Eagle is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Eagle Bancorp Montana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bancorp Montana 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp Montana has no effect on the direction of Regions Financial i.e., Regions Financial and Eagle Bancorp go up and down completely randomly.

Pair Corralation between Regions Financial and Eagle Bancorp

Assuming the 90 days horizon Regions Financial is expected to under-perform the Eagle Bancorp. In addition to that, Regions Financial is 1.24 times more volatile than Eagle Bancorp Montana. It trades about -0.32 of its total potential returns per unit of risk. Eagle Bancorp Montana is currently generating about -0.02 per unit of volatility. If you would invest  1,284  in Eagle Bancorp Montana on January 28, 2024 and sell it today you would lose (6.00) from holding Eagle Bancorp Montana or give up 0.47% 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.  Eagle Bancorp Montana

Regions Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Regions Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eagle Bancorp Montana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Bancorp Montana has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Regions Financial and Eagle Bancorp

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

The idea behind Regions Financial and Eagle Bancorp Montana 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.