Correlation Between KB Financial and Zions Bancorporation

Can any of the company-specific risk be diversified away by investing in both KB 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 KB 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 KB Financial Group and Zions Bancorporation National, you can compare the effects of market volatilities on KB 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 KB Financial with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Zions Bancorporation.

Diversification Opportunities for KB Financial and Zions Bancorporation

0.72

Correlation Coefficient

KB Financial  Zions Bancorporation

Poor diversification

The 3 months correlation between KB Financial and Zions is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KB 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 KB 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 KB 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 KB Financial i.e., KB Financial and Zions Bancorporation go up and down completely randomly.

Pair Corralation between KB Financial and Zions Bancorporation

Allowing for the 90-day total investment horizon KB Financial is expected to generate 12.0 times less return on investment than Zions Bancorporation. In addition to that, KB Financial is 3.86 times more volatile than Zions Bancorporation National. It trades about 0.0 of its total potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.04 per unit of volatility. If you would invest  2,443  in Zions Bancorporation National on October 25, 2024 and sell it today you would earn a total of  61.00  from holding Zions Bancorporation National or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.18%
Values	Daily Returns

KB Financial Group  vs.  Zions Bancorp. National

KB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zions Bancorporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zions Bancorporation National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zions Bancorporation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KB Financial and Zions Bancorporation

The main advantage of trading using opposite KB Financial and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB 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 KB 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.