Correlation Between Zions Bancorporation and Wintrust Financial

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

Diversification Opportunities for Zions Bancorporation and Wintrust Financial

-0.48

Correlation Coefficient

Zions Bancorporation  Wintrust Financial

Very good diversification

The 3 months correlation between Zions and Wintrust is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. National and Wintrust Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintrust Financial Corp 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 Wintrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintrust Financial Corp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and Wintrust Financial go up and down completely randomly.

Pair Corralation between Zions Bancorporation and Wintrust Financial

Assuming the 90 days horizon Zions Bancorporation National is expected to generate 1.13 times more return on investment than Wintrust Financial. However, Zions Bancorporation is 1.13 times more volatile than Wintrust Financial Corp. It trades about 0.03 of its potential returns per unit of risk. Wintrust Financial Corp is currently generating about 0.03 per unit of risk. If you would invest  2,104  in Zions Bancorporation National on September 24, 2024 and sell it today you would earn a total of  400.00  from holding Zions Bancorporation National or generate 19.01% return on investment over 90 days.

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

Zions Bancorp. National  vs.  Wintrust Financial Corp

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.

Wintrust Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wintrust Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Wintrust Financial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zions Bancorporation and Wintrust Financial

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

The idea behind Zions Bancorporation National and Wintrust Financial Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.