Correlation Between Regions Financial and ServisFirst Bancshares

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

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

Diversification Opportunities for Regions Financial and ServisFirst Bancshares

0.61

Correlation Coefficient

Regions Financial  ServisFirst Bancshares

Poor diversification

The 3 months correlation between Regions and ServisFirst is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and ServisFirst Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServisFirst Bancshares 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 ServisFirst Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServisFirst Bancshares has no effect on the direction of Regions Financial i.e., Regions Financial and ServisFirst Bancshares go up and down completely randomly.

Pair Corralation between Regions Financial and ServisFirst Bancshares

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.96 times more return on investment than ServisFirst Bancshares. However, Regions Financial is 1.04 times less risky than ServisFirst Bancshares. It trades about 0.22 of its potential returns per unit of risk. ServisFirst Bancshares is currently generating about 0.07 per unit of risk. If you would invest  2,080  in Regions Financial on May 2, 2025 and sell it today you would earn a total of  490.00  from holding Regions Financial or generate 23.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Regions Financial  vs.  ServisFirst Bancshares

Regions Financial

Risk-Adjusted Performance

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.

ServisFirst Bancshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, ServisFirst Bancshares may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Regions Financial and ServisFirst Bancshares

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

The idea behind Regions Financial and ServisFirst Bancshares 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.