Correlation Between Andover Bancorp and Zions Bancorporation
Can any of the company-specific risk be diversified away by investing in both Andover Bancorp and Zions Bancorporation 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 Andover Bancorp and Zions Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andover Bancorp and Zions Bancorporation, you can compare the effects of market volatilities on Andover Bancorp and Zions Bancorporation 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 Andover Bancorp with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andover Bancorp and Zions Bancorporation.
Diversification Opportunities for Andover Bancorp and Zions Bancorporation
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Andover and Zions is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Andover Bancorp and Zions Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Andover Bancorp 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 Andover Bancorp are associated (or correlated) with Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Andover Bancorp i.e., Andover Bancorp and Zions Bancorporation go up and down completely randomly.
Pair Corralation between Andover Bancorp and Zions Bancorporation
Given the investment horizon of 90 days Andover Bancorp is expected to generate 5.24 times less return on investment than Zions Bancorporation. In addition to that, Andover Bancorp is 1.06 times more volatile than Zions Bancorporation. It trades about 0.02 of its total potential returns per unit of risk. Zions Bancorporation is currently generating about 0.1 per unit of volatility. If you would invest 3,745 in Zions Bancorporation on October 22, 2024 and sell it today you would earn a total of 2,059 from holding Zions Bancorporation or generate 54.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.82% |
| Values | Daily Returns |
Andover Bancorp vs. Zions Bancorp.
Performance |
| Timeline |
| Andover Bancorp |
| Zions Bancorporation |
Andover Bancorp and Zions Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andover Bancorp and Zions Bancorporation
The main advantage of trading using opposite Andover Bancorp and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andover Bancorp position performs unexpectedly, Zions Bancorporation 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 Zions Bancorporation will offset losses from the drop in Zions Bancorporation's long position.The idea behind Andover Bancorp and Zions Bancorporation 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.| Zions Bancorporation vs. KeyCorp | Zions Bancorporation vs. Comerica | Zions Bancorporation vs. First Horizon National | Zions Bancorporation vs. Western Alliance Bancorporation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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