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Will Regions Financial (NYSE:RF) latest volatility surge scare shareholders?
 | By Ellen Johnson | Macroaxis Story |
It looks as if Regions Financial may not recover as fast as we have hopped for as its price went down 0.28% today. Regions Financial current daily volatility is 3.18 percent, with a beta of 0.05 and an alpha of 0.57 over DOW. As many millenniums are trying to avoid the latest volatility, we are going to digest Regions Financial a little further to understand its historical price patterns. We will analyze why Regions Financial investors may still consider a stake in the business.
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Reviewed by Michael Smolkin
Regions Financial reports roughly 5.85 B in cash with 2.82 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 6.09. The company reports 6.72 B of total liabilities with total debt to equity ratio (D/E) of 6.48, which implies that Regions Financial may not be able to produce enough cash to satisfy its debt commitments.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Regions Financial. Your research has to be compared to or analyzed against Regions Financial's peers to derive any actionable benefits. When done correctly, Regions Financial's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Regions Financial.
Investing in Regions Financial, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Regions Financial along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Regions Financial's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
How important is Regions Financial's Liquidity
Regions Financial financial leverage refers to using borrowed capital as a funding source to finance Regions Financial ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Regions Financial financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Regions Financial's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Regions Financial's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Regions Financial's total debt and its cash.
Regions Financial Gross Profit
Regions Financial Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Regions Financial previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Regions Financial Gross Profit growth over the last 10 years. Please check Regions Financial's gross profit and other fundamental indicators for more details.
Regions Financial Correlation with Peers
Investors in Regions can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Regions Financial. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Regions Financial and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Regions is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Regions for more details
What is driving Regions Financial Investor Appetite?
Regions Financial appears to be not too volatile, given 1 month investment horizon. Regions Financial maintains Sharpe Ratio (i.e. Efficiency) of 0.16, which implies the firm had 0.16% of return per unit of risk over the last month. Our standpoint towards forecasting the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. By analyzing Regions Financial technical indicators you can presently evaluate if the expected return of 0.51% is justified by implied risk. Please employ Regions Financial Risk Adjusted Performance of 0.1817, semi deviation of 1.86, and Coefficient Of Variation of 555.45 to confirm if our risk estimates are consistent with your expectations.
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This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Regions Financial. Please refer to our Terms of Use for any information regarding our disclosure principles.