Correlation Between Regions Financial and 1st Source

Can any of the company-specific risk be diversified away by investing in both Regions Financial and 1st Source 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 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Regions Financial and 1st Source, you can compare the effects of market volatilities on Regions Financial and 1st Source 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 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and 1st Source.

Diversification Opportunities for Regions Financial and 1st Source

0.55

Correlation Coefficient

Regions Financial  1st Source

Very weak diversification

The 3 months correlation between Regions and 1st is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source 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 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of Regions Financial i.e., Regions Financial and 1st Source go up and down completely randomly.

Pair Corralation between Regions Financial and 1st Source

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.19 times more return on investment than 1st Source. However, Regions Financial is 1.19 times more volatile than 1st Source. It trades about 0.21 of its potential returns per unit of risk. 1st Source is currently generating about -0.01 per unit of risk. If you would invest  2,047  in Regions Financial on May 6, 2025 and sell it today you would earn a total of  471.00  from holding Regions Financial or generate 23.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Regions Financial  vs.  1st Source

Regions Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.

1st Source

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1st Source has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, 1st Source is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Regions Financial and 1st Source

The main advantage of trading using opposite Regions Financial and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.

The idea behind Regions Financial and 1st Source 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.