Correlation Between Washington Trust and Zions Bancorporation
Can any of the company-specific risk be diversified away by investing in both Washington Trust 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 Washington Trust and Zions Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Zions Bancorporation National, you can compare the effects of market volatilities on Washington Trust 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 Washington Trust with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Zions Bancorporation.
Diversification Opportunities for Washington Trust and Zions Bancorporation
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Zions is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Washington Trust 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 Washington Trust 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 Washington Trust i.e., Washington Trust and Zions Bancorporation go up and down completely randomly.
Pair Corralation between Washington Trust and Zions Bancorporation
Given the investment horizon of 90 days Washington Trust Bancorp is expected to generate 6.19 times more return on investment than Zions Bancorporation. However, Washington Trust is 6.19 times more volatile than Zions Bancorporation National. It trades about 0.1 of its potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.38 per unit of risk. If you would invest 3,483 in Washington Trust Bancorp on August 25, 2024 and sell it today you would earn a total of 258.00 from holding Washington Trust Bancorp or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. Zions Bancorp. National
Performance |
| Timeline |
| Washington Trust Bancorp |
| Zions Bancorporation |
Washington Trust and Zions Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Zions Bancorporation
The main advantage of trading using opposite Washington Trust and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust 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.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| Zions Bancorporation vs. Capital One Financial | Zions Bancorporation vs. Capital One Financial | Zions Bancorporation vs. Bank of America | Zions Bancorporation vs. KeyCorp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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