Correlation Between OceanFirst Financial and Zions Bancorporation

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

Diversification Opportunities for OceanFirst Financial and Zions Bancorporation

-0.6

Correlation Coefficient

OceanFirst Financial  Zions Bancorporation

Excellent diversification

The 3 months correlation between OceanFirst and Zions is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding OceanFirst Financial 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 OceanFirst 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 OceanFirst Financial 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 OceanFirst Financial i.e., OceanFirst Financial and Zions Bancorporation go up and down completely randomly.

Pair Corralation between OceanFirst Financial and Zions Bancorporation

Assuming the 90 days horizon OceanFirst Financial Corp is expected to generate 1.24 times more return on investment than Zions Bancorporation. However, OceanFirst Financial is 1.24 times more volatile than Zions Bancorporation National. It trades about 0.02 of its potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.03 per unit of risk. If you would invest  2,185  in OceanFirst Financial Corp on October 5, 2024 and sell it today you would earn a total of  330.00  from holding OceanFirst Financial Corp or generate 15.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

OceanFirst Financial Corp  vs.  Zions Bancorp. National

OceanFirst Financial Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OceanFirst Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, OceanFirst Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail 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 OceanFirst Financial and Zions Bancorporation

The main advantage of trading using opposite OceanFirst Financial and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OceanFirst 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 OceanFirst Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.