Correlation Between Southeastern Banking and Zions Bancorporation

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

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

Diversification Opportunities for Southeastern Banking and Zions Bancorporation

-0.42

Correlation Coefficient

Southeastern Banking  Zions Bancorporation

Very good diversification

The 3 months correlation between Southeastern and Zions is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Southeastern Banking Corp and Zions Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Southeastern Banking 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 Southeastern Banking 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 Southeastern Banking i.e., Southeastern Banking and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Southeastern Banking and Zions Bancorporation

Given the investment horizon of 90 days Southeastern Banking Corp is expected to generate 1.06 times more return on investment than Zions Bancorporation. However, Southeastern Banking is 1.06 times more volatile than Zions Bancorporation. It trades about 0.04 of its potential returns per unit of risk. Zions Bancorporation is currently generating about -0.1 per unit of risk. If you would invest  2,404  in Southeastern Banking Corp on December 4, 2024 and sell it today you would earn a total of  81.00  from holding Southeastern Banking Corp or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

Southeastern Banking Corp  vs.  Zions Bancorp.

Southeastern Banking Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southeastern Banking Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Southeastern Banking is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Zions Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zions Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Southeastern Banking and Zions Bancorporation

The main advantage of trading using opposite Southeastern Banking and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southeastern Banking 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 Southeastern Banking Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.