Correlation Between Zions Bancorporation and HomeTrust Bancshares

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

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

Diversification Opportunities for Zions Bancorporation and HomeTrust Bancshares

0.89

Correlation Coefficient

Zions Bancorporation  HomeTrust Bancshares

Very poor diversification

The 3 months correlation between Zions and HomeTrust is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust 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 HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Zions Bancorporation and HomeTrust Bancshares

Given the investment horizon of 90 days Zions Bancorporation is expected to generate 1.1 times less return on investment than HomeTrust Bancshares. In addition to that, Zions Bancorporation is 1.53 times more volatile than HomeTrust Bancshares. It trades about 0.03 of its total potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.05 per unit of volatility. If you would invest  2,294  in HomeTrust Bancshares on September 26, 2024 and sell it today you would earn a total of  1,119  from holding HomeTrust Bancshares or generate 48.78% return on investment over 90 days.

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

Zions Bancorp.  vs.  HomeTrust Bancshares

Zions Bancorporation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 9 (%) 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.

HomeTrust Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Zions Bancorporation and HomeTrust Bancshares

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

The idea behind Zions Bancorporation and HomeTrust 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.