Correlation Between ZB FINANCIAL and Morgan Co

Can any of the company-specific risk be diversified away by investing in both ZB FINANCIAL and Morgan Co 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 ZB FINANCIAL and Morgan Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZB FINANCIAL HOLDINGS and Morgan Co Multi, you can compare the effects of market volatilities on ZB FINANCIAL and Morgan Co 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 ZB FINANCIAL with a short position of Morgan Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZB FINANCIAL and Morgan Co.

Diversification Opportunities for ZB FINANCIAL and Morgan Co

0.31

Correlation Coefficient

ZB FINANCIAL  Morgan Co

Weak diversification

The 3 months correlation between ZBFH and Morgan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ZB FINANCIAL HOLDINGS and Morgan Co Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Co Multi and ZB 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 ZB FINANCIAL HOLDINGS are associated (or correlated) with Morgan Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Co Multi has no effect on the direction of ZB FINANCIAL i.e., ZB FINANCIAL and Morgan Co go up and down completely randomly.

Pair Corralation between ZB FINANCIAL and Morgan Co

Assuming the 90 days trading horizon ZB FINANCIAL HOLDINGS is expected to under-perform the Morgan Co. In addition to that, ZB FINANCIAL is 1.66 times more volatile than Morgan Co Multi. It trades about -0.24 of its total potential returns per unit of risk. Morgan Co Multi is currently generating about -0.07 per unit of volatility. If you would invest  21,100  in Morgan Co Multi on October 27, 2024 and sell it today you would lose (2,100) from holding Morgan Co Multi or give up 9.95% of portfolio value over 90 days.

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

ZB FINANCIAL HOLDINGS  vs.  Morgan Co Multi

ZB FINANCIAL HOLDINGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZB FINANCIAL HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Morgan Co Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Co Multi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ZB FINANCIAL and Morgan Co

The main advantage of trading using opposite ZB FINANCIAL and Morgan Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZB FINANCIAL position performs unexpectedly, Morgan Co 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 Morgan Co will offset losses from the drop in Morgan Co's long position.

The idea behind ZB FINANCIAL HOLDINGS and Morgan Co Multi 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.