Correlation Between MT Bank and Zions Bancorporation

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

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

Diversification Opportunities for MT Bank and Zions Bancorporation

0.95

Correlation Coefficient

MT Bank  Zions Bancorporation

Almost no diversification

The 3 months correlation between MTZ and Zions is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and MT Bank 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 MT Bank Corp 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 MT Bank i.e., MT Bank and Zions Bancorporation go up and down completely randomly.

Pair Corralation between MT Bank and Zions Bancorporation

Assuming the 90 days horizon MT Bank Corp is expected to under-perform the Zions Bancorporation. But the stock apears to be less risky and, when comparing its historical volatility, MT Bank Corp is 1.33 times less risky than Zions Bancorporation. The stock trades about -0.6 of its potential returns per unit of risk. The Zions Bancorporation National is currently generating about -0.35 of returns per unit of risk over similar time horizon. If you would invest  5,772  in Zions Bancorporation National on September 25, 2024 and sell it today you would lose (623.00) from holding Zions Bancorporation National or give up 10.79% of portfolio value over 90 days.

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

MT Bank Corp  vs.  Zions Bancorp. National

MT Bank Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Zions Bancorporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation National are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zions Bancorporation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MT Bank and Zions Bancorporation

The main advantage of trading using opposite MT Bank and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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 MT Bank Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.