Correlation Between Zions Bancorporation and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Zions Bancorporation and FS Bancorp 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 FS Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zions Bancorporation and FS Bancorp, you can compare the effects of market volatilities on Zions Bancorporation and FS Bancorp 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 FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and FS Bancorp.
Diversification Opportunities for Zions Bancorporation and FS Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zions and FSBW is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS 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 are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and FS Bancorp go up and down completely randomly.
Pair Corralation between Zions Bancorporation and FS Bancorp
Given the investment horizon of 90 days Zions Bancorporation is expected to generate 1.48 times more return on investment than FS Bancorp. However, Zions Bancorporation is 1.48 times more volatile than FS Bancorp. It trades about 0.22 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.12 per unit of risk. If you would invest 5,214 in Zions Bancorporation on August 28, 2024 and sell it today you would earn a total of 959.00 from holding Zions Bancorporation or generate 18.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zions Bancorp. vs. FS Bancorp
Performance |
| Timeline |
| Zions Bancorporation |
| FS Bancorp |
Zions Bancorporation and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zions Bancorporation and FS Bancorp
The main advantage of trading using opposite Zions Bancorporation and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation position performs unexpectedly, FS Bancorp 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Zions Bancorporation vs. Fifth Third Bancorp | Zions Bancorporation vs. Huntington Bancshares Incorporated | Zions Bancorporation vs. Comerica | Zions Bancorporation vs. MT Bank |
| FS Bancorp vs. Fifth Third Bancorp | FS Bancorp vs. Huntington Bancshares Incorporated | FS Bancorp vs. Comerica | FS Bancorp vs. MT Bank |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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