Correlation Between Zions Bancorporation and First Citizens

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

By analyzing existing cross correlation between Zions Bancorporation and First Citizens BancShares, you can compare the effects of market volatilities on Zions Bancorporation and First Citizens 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 First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and First Citizens.

Diversification Opportunities for Zions Bancorporation and First Citizens

0.97

Correlation Coefficient

Zions Bancorporation  First Citizens

Almost no diversification

The 3 months correlation between Zions and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and First Citizens go up and down completely randomly.

Pair Corralation between Zions Bancorporation and First Citizens

Given the investment horizon of 90 days Zions Bancorporation is expected to generate 0.97 times more return on investment than First Citizens. However, Zions Bancorporation is 1.03 times less risky than First Citizens. It trades about -0.06 of its potential returns per unit of risk. First Citizens BancShares is currently generating about -0.1 per unit of risk. If you would invest  5,426  in Zions Bancorporation on December 27, 2024 and sell it today you would lose (400.00) from holding Zions Bancorporation or give up 7.37% of portfolio value over 90 days.

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

Zions Bancorp.  vs.  First Citizens BancShares

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.

First Citizens BancShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Citizens BancShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental 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 Zions Bancorporation and First Citizens

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

The idea behind Zions Bancorporation and First Citizens BancShares 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.