Correlation Between International Bancshares and Zions Bancorporation

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

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

Diversification Opportunities for International Bancshares and Zions Bancorporation

0.97

Correlation Coefficient

International Bancshares  Zions Bancorporation

Almost no diversification

The 3 months correlation between International and Zions is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Zions Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and International Bancshares 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 International Bancshares 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 International Bancshares i.e., International Bancshares and Zions Bancorporation go up and down completely randomly.

Pair Corralation between International Bancshares and Zions Bancorporation

Given the investment horizon of 90 days International Bancshares is expected to under-perform the Zions Bancorporation. In addition to that, International Bancshares is 1.04 times more volatile than Zions Bancorporation. It trades about -0.28 of its total potential returns per unit of risk. Zions Bancorporation is currently generating about -0.26 per unit of volatility. If you would invest  5,914  in Zions Bancorporation on September 22, 2024 and sell it today you would lose (547.00) from holding Zions Bancorporation or give up 9.25% of portfolio value over 90 days.

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

International Bancshares  vs.  Zions Bancorp.

International Bancshares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, International Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zions Bancorporation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Zions Bancorporation displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Bancshares and Zions Bancorporation

The main advantage of trading using opposite International Bancshares and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares 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 International Bancshares and Zions Bancorporation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.