Correlation Between Zions Bancorporation and Camden National

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

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

Diversification Opportunities for Zions Bancorporation and Camden National

0.75

Correlation Coefficient

Zions Bancorporation  Camden National

Poor diversification

The 3 months correlation between Zions and Camden is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and Camden National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden National and Zions Bancorporation 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 Zions Bancorporation are associated (or correlated) with Camden National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden National has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and Camden National go up and down completely randomly.

Pair Corralation between Zions Bancorporation and Camden National

Given the investment horizon of 90 days Zions Bancorporation is expected to under-perform the Camden National. In addition to that, Zions Bancorporation is 1.3 times more volatile than Camden National. It trades about -0.05 of its total potential returns per unit of risk. Camden National is currently generating about -0.02 per unit of volatility. If you would invest  4,242  in Camden National on December 27, 2024 and sell it today you would lose (88.00) from holding Camden National or give up 2.07% of portfolio value over 90 days.

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

Zions Bancorp.  vs.  Camden National

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 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.

Camden National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Camden National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Camden National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zions Bancorporation and Camden National

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

The idea behind Zions Bancorporation and Camden 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.