Correlation Between Zions Bancorporation and First Internet

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

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

Diversification Opportunities for Zions Bancorporation and First Internet

-0.41

Correlation Coefficient

Zions Bancorporation  First Internet

Very good diversification

The 3 months correlation between Zions and First is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. National and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet 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 National are associated (or correlated) with First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and First Internet go up and down completely randomly.

Pair Corralation between Zions Bancorporation and First Internet

Assuming the 90 days horizon Zions Bancorporation is expected to generate 1.76 times less return on investment than First Internet. But when comparing it to its historical volatility, Zions Bancorporation National is 1.71 times less risky than First Internet. It trades about 0.06 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,070  in First Internet Bancorp on October 4, 2024 and sell it today you would earn a total of  430.00  from holding First Internet Bancorp or generate 20.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Zions Bancorp. National  vs.  First Internet Bancorp

Zions Bancorporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zions Bancorporation National 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.

First Internet Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Internet Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, First Internet is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zions Bancorporation and First Internet

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

The idea behind Zions Bancorporation National and First Internet 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.