Correlation Between Citizens Financial and Zions Bancorporation

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

By analyzing existing cross correlation between Citizens Financial Group, and Zions Bancorporation National, you can compare the effects of market volatilities on Citizens Financial and Zions Bancorporation 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 Citizens Financial with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Zions Bancorporation.

Diversification Opportunities for Citizens Financial and Zions Bancorporation

-0.57

Correlation Coefficient

Citizens Financial  Zions Bancorporation

Excellent diversification

The 3 months correlation between Citizens and Zions is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Citizens 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 Citizens Financial Group, are associated (or correlated) with Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Citizens Financial i.e., Citizens Financial and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Citizens Financial and Zions Bancorporation

Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.35 times less return on investment than Zions Bancorporation. But when comparing it to its historical volatility, Citizens Financial Group, is 3.95 times less risky than Zions Bancorporation. It trades about 0.11 of its potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,853  in Zions Bancorporation National on October 5, 2024 and sell it today you would earn a total of  528.00  from holding Zions Bancorporation National or generate 28.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.26%
Values	Daily Returns

Citizens Financial Group,  vs.  Zions Bancorp. National

Citizens Financial Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Zions Bancorporation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation National are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Zions Bancorporation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citizens Financial and Zions Bancorporation

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

The idea behind Citizens Financial Group, and Zions Bancorporation National 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.