Correlation Between Regions Financial and Crdit Agricole

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

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

Diversification Opportunities for Regions Financial and Crdit Agricole

0.11

Correlation Coefficient

Regions Financial  Crdit Agricole

Average diversification

The 3 months correlation between Regions and Crdit is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA 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 Crdit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Regions Financial i.e., Regions Financial and Crdit Agricole go up and down completely randomly.

Pair Corralation between Regions Financial and Crdit Agricole

Assuming the 90 days horizon Regions Financial is expected to generate 1.42 times less return on investment than Crdit Agricole. But when comparing it to its historical volatility, Regions Financial is 3.77 times less risky than Crdit Agricole. It trades about 0.12 of its potential returns per unit of risk. Crdit Agricole SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,534  in Crdit Agricole SA on March 12, 2024 and sell it today you would earn a total of  68.00  from holding Crdit Agricole SA or generate 4.43% return on investment over 90 days.

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

Regions Financial  vs.  Crdit Agricole SA

Regions Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Crdit Agricole SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Crdit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regions Financial and Crdit Agricole

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

The idea behind Regions Financial and Crdit Agricole SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.