Correlation Between Bank of America and Zions Bancorporation
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Zions Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Zions Bancorporation National, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Zions Bancorporation.
Diversification Opportunities for Bank of America and Zions Bancorporation
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Zions is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Zions Bancorporation go up and down completely randomly.
Pair Corralation between Bank of America and Zions Bancorporation
Assuming the 90 days trading horizon Bank of America is expected to generate 3.04 times less return on investment than Zions Bancorporation. But when comparing it to its historical volatility, Bank of America is 2.29 times less risky than Zions Bancorporation. It trades about 0.03 of its potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,861 in Zions Bancorporation National on November 19, 2024 and sell it today you would earn a total of 529.00 from holding Zions Bancorporation National or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank of America vs. Zions Bancorp. National
Performance |
| Timeline |
| Bank of America |
| Zions Bancorporation |
Bank of America and Zions Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Zions Bancorporation
The main advantage of trading using opposite Bank of America and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Bank of America | Bank of America vs. Wells Fargo | Bank of America vs. Capital One Financial | Bank of America vs. Capital One Financial |
| Zions Bancorporation vs. Valley National Bancorp | Zions Bancorporation vs. Valley National Bancorp | Zions Bancorporation vs. Wintrust Financial Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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