Correlation Between Zions Bancorporation and First Bancorp

Can any of the company-specific risk be diversified away by investing in both Zions Bancorporation and First Bancorp 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 Bancorp 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 Bancorp, you can compare the effects of market volatilities on Zions Bancorporation and First Bancorp 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 Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and First Bancorp.

Diversification Opportunities for Zions Bancorporation and First Bancorp

0.91

Correlation Coefficient

Zions Bancorporation  First Bancorp

Almost no diversification

The 3 months correlation between Zions and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and First Bancorp go up and down completely randomly.

Pair Corralation between Zions Bancorporation and First Bancorp

Given the investment horizon of 90 days Zions Bancorporation is expected to generate 0.74 times more return on investment than First Bancorp. However, Zions Bancorporation is 1.34 times less risky than First Bancorp. It trades about -0.15 of its potential returns per unit of risk. First Bancorp is currently generating about -0.11 per unit of risk. If you would invest  5,960  in Zions Bancorporation on September 15, 2024 and sell it today you would lose (193.00) from holding Zions Bancorporation or give up 3.24% 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 Bancorp

Zions Bancorporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Zions Bancorporation displayed solid returns over the last few months and may actually be approaching a breakup point.

First Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, First Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zions Bancorporation and First Bancorp

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

The idea behind Zions Bancorporation and First Bancorp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.