Correlation Between Zions Bancorporation and United Bankshares
Can any of the company-specific risk be diversified away by investing in both Zions Bancorporation and United Bankshares 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 United Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zions Bancorporation and United Bankshares, you can compare the effects of market volatilities on Zions Bancorporation and United Bankshares 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 United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and United Bankshares.
Diversification Opportunities for Zions Bancorporation and United Bankshares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zions and United is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bankshares 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 United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and United Bankshares go up and down completely randomly.
Pair Corralation between Zions Bancorporation and United Bankshares
Given the investment horizon of 90 days Zions Bancorporation is expected to under-perform the United Bankshares. In addition to that, Zions Bancorporation is 1.05 times more volatile than United Bankshares. It trades about -0.25 of its total potential returns per unit of risk. United Bankshares is currently generating about -0.19 per unit of volatility. If you would invest 3,759 in United Bankshares on December 5, 2024 and sell it today you would lose (236.00) from holding United Bankshares or give up 6.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Zions Bancorp. vs. United Bankshares
Performance |
Timeline |
Zions Bancorporation |
United Bankshares |
Zions Bancorporation and United Bankshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zions Bancorporation and United Bankshares
The main advantage of trading using opposite Zions Bancorporation and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation position performs unexpectedly, United Bankshares 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 United Bankshares will offset losses from the drop in United Bankshares' long position.Zions Bancorporation vs. KeyCorp | Zions Bancorporation vs. Comerica | Zions Bancorporation vs. First Horizon National | Zions Bancorporation vs. Western Alliance Bancorporation |
United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier Bancorp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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