Correlation Between Zions Bancorporation and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Zions Bancorporation and Northeast 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 Northeast 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 Northeast Bancorp, you can compare the effects of market volatilities on Zions Bancorporation and Northeast 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and Northeast Bancorp.
Diversification Opportunities for Zions Bancorporation and Northeast Bancorp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zions and Northeast is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Zions Bancorporation and Northeast Bancorp
Given the investment horizon of 90 days Zions Bancorporation is expected to generate 1.11 times less return on investment than Northeast Bancorp. In addition to that, Zions Bancorporation is 1.17 times more volatile than Northeast Bancorp. It trades about 0.1 of its total potential returns per unit of risk. Northeast Bancorp is currently generating about 0.13 per unit of volatility. If you would invest 5,230 in Northeast Bancorp on August 25, 2024 and sell it today you would earn a total of 4,910 from holding Northeast Bancorp or generate 93.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zions Bancorp. vs. Northeast Bancorp
Performance |
| Timeline |
| Zions Bancorporation |
| Northeast Bancorp |
Zions Bancorporation and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zions Bancorporation and Northeast Bancorp
The main advantage of trading using opposite Zions Bancorporation and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation position performs unexpectedly, Northeast 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| Zions Bancorporation vs. KeyCorp | Zions Bancorporation vs. Comerica | Zions Bancorporation vs. First Horizon National | Zions Bancorporation vs. Western Alliance Bancorporation |
| Northeast Bancorp vs. Fifth Third Bancorp | Northeast Bancorp vs. Zions Bancorporation | Northeast Bancorp vs. Huntington Bancshares Incorporated | Northeast Bancorp vs. PNC Financial Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |